AL
Alabama House Bill HB47

Alabama 2022 Regular Session

Alabama House Bill HB47 Compare Versions

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11 1 HB47
2-2 218588-2
2+2 214702-1
33 3 By Representative Brown (K)
44 4 RFD: Boards, Agencies and Commissions
55 5 First Read: 11-JAN-22
6-6 PFD: 12/07/2021
76
8-Page 0 1 ENGROSSED
7+Page 0 1 214702-1:n:11/29/2021:KMS*/cmg LSA2021-1703
98 2
109 3
11-4 A BILL
12-5 TO BE ENTITLED
13-6 AN ACT
10+4
11+5
12+6
1413 7
15-8 Relating to the Alabama Board of Funeral Service; to
16-9 amend Sections 34-13-1 and 34-13-20, Code of Alabama 1975, to
17-10 provide further for definitions and the membership of the
18-11 board; to add Article 5 to Chapter 13, Title 34, Code of
19-12 Alabama 1975, by amending and renumbering Sections 27-17A-1,
20-13 27-17A-3, 27-17A-4, 27-17A-10 to 27-17A-25, inclusive,
21-14 27-17A-30 to 27-17A-34, inclusive, and 27-17A-40 to 27-17A-57,
22-15 inclusive, as Sections 34-13-170 to 34-13-172, inclusive,
23-16 34-13-190 to 34-13-206, inclusive, 34-13-230 to 34-13-234,
24-17 inclusive, and 34-13-260 to 34-13-277, inclusive, Code of
25-18 Alabama 1975; to establish the Alabama Preneed Funeral and
26-19 Cemetery Act of 2022; to transfer the existing Preneed Funeral
27-20 and Cemetery Act, and the regulation of preneed contracts,
28-21 from the Commissioner and Department of Insurance to the
29-22 Alabama Board of Funeral Service; to make corresponding
30-23 technical changes; to authorize the Department of Insurance to
31-24 temporarily transfer certain funds to the board to defray
32-25 costs associated with the administration and operation of the
33-26 Alabama Preneed Funeral and Cemetery Act of 2022; and to
34-27 repeal Section 27-17A-2, Code of Alabama 1975, relating to
35-Page 1 1 definitions; and in connection therewith would have as its
36-2 purpose or effect the requirement of a new or increased
37-3 expenditure of local funds within the meaning of Amendment 621
38-4 of the Constitution of Alabama of 1901, as amended by
39-5 Amendment 890, now appearing as Section 111.05 of the Official
40-6 Recompilation of the Constitution of Alabama of 1901, as
41-7 amended.
42-8 BE IT ENACTED BY THE LEGISLATURE OF ALABAMA:
43-9 Section 1. Sections 34-13-1 and 34-13-20 of the Code
44-10 of Alabama 1975, are amended to read as follows:
45-11 "§34-13-1.
46-12 "(a) For purposes of this chapter, the following
47-13 terms shall have the following meanings:
48-14 "(1) ACCREDITED SCHOOL or COLLEGE OF MORTUARY
49-15 SCIENCE. A school or college approved by the Alabama American
50-16 Board of Funeral Service and Education, or a successor
51-17 organization, which maintains a course of instruction of not
52-18 less than 48 calendar weeks or four academic quarters or
53-19 college terms and which gives a course of instruction in the
54-20 fundamental subjects including, but not limited to, the
55-21 following:
56-22 "a. Mortuary management and administration.
57-23 "b. Legal medicine and toxicology as it pertains to
58-24 funeral directing.
59-25 "c. Public health, hygiene, and sanitary science.
60-26 "d. Mortuary science, to include embalming
61-27 technique, in all its aspects; chemistry of embalming, color
62-Page 2 1 harmony; discoloration, its causes, effects, and treatment;
63-2 treatment of special cases; restorative art; funeral
64-3 management; and professional ethics.
65-4 "e. Anatomy and physiology.
66-5 "f. Chemistry, organic and inorganic.
67-6 "g. Pathology.
68-7 "h. Bacteriology.
69-8 "i. Sanitation and hygiene.
70-9 "j. Public health regulations.
71-10 "k. Other related to funeral service and mortuary
72-11 science education as approved by the American Board of Funeral
73-12 Service Education, or a successor organization, and other
74-13 courses of instruction in fundamental subjects as may be
75-14 prescribed by the Alabama Board of Funeral Service.
76-15 "(2) ALKALINE HYDROLYSIS. The technical process that
77-16 reduces human remains to bone fragments using heat, water, and
78-17 chemical agents.
79-18 "(3) ALTERNATIVE CONTAINER. A nonmetal receptacle or
80-19 enclosure, without ornamentation or a fixed interior lining,
81-20 which is designed for the encasement of human remains and
82-21 which is made of cardboard, pressed-wood, composition
83-22 materials, with or without an outside covering, pouches of
84-23 canvas, or other materials.
85-24 "(3)(4) AMERICAN BOARD OF FUNERAL SERVICE EDUCATION.
86-25 That funeral service educational organization which is an
87-26 agency granted official recognition by the United States
88-27 Secretary of Education and which is composed of members
89-Page 3 1 representing the American Association of College of Mortuary
90-2 Science, the Conference of Funeral Service Examining Board of
91-3 the United States, Inc., the National Association of Colleges
92-4 of Mortuary Science, and the University Mortuary Science
93-5 Education Association and which has as its object the
94-6 furtherance of education in the field of funeral service and
95-7 in fields necessary to, or allied with, the field of funeral
96-8 service, and further to formulate standards of funeral service
97-9 education and to grant accreditation to qualified schools and
98-10 colleges of mortuary science and to do all things incidental
99-11 to the foregoing The national academic accreditation agency
100-12 for college and university programs in funeral service and
101-13 mortuary science education. The accrediting function of the
102-14 American Board of Funeral Service Education is recognized by
103-15 the United States Department of Education and the Council on
104-16 Higher Education Accreditation.
105-17 "(4)(5) APPRENTICE EMBALMER or EMBALMER'S
106-18 APPRENTICE. Any person engaged in the study of the art of
107-19 embalming under the instructions and supervision of a licensed
108-20 embalmer practicing in this state.
109-21 "(5)(6) APPRENTICE FUNERAL DIRECTOR or FUNERAL
110-22 DIRECTOR'S APPRENTICE. Any person operating under or in
111-23 association with a funeral director for the purpose of
112-24 learning the business or profession of funeral director, to
113-25 the end that he or she may become licensed under this chapter.
114-26 "(7) AT NEED. At the time of death or immediately
115-27 following death.
116-Page 4 1 "(6)(8) AUTHORIZING AGENT. A person at least 18
117-2 years of age who is at least the legal age of majority in this
118-3 state, except in the case of a surviving spouse or parent, who
119-4 is legally entitled to order the cremation or final
120-5 disposition of particular human remains.
121-6 "(9) BASIC SERVICES FEE. The fee for the
122-7 professional services of the funeral director and staff that
123-8 is added to the total cost of the funeral arrangements. The
124-9 term includes a charge for services performed in conducting
125-10 the arrangements conference, planning the funeral, securing
126-11 the necessary permits, preparing the notices, and coordinating
127-12 the cemetery or crematory arrangements.
128-13 "(10) BELOW-GROUND CRYPT. A preplaced enclosed
129-14 chamber, usually constructed of reinforced concrete, poured in
130-15 place or a precast unit installed in quantity, either
131-16 side-by-side or multiple depth, and covered by earth or sod
132-17 and known also as a lawn crypt or turf-top crypt.
133-18 "(11) BENEFICIARY. One who benefits from an act,
134-19 such as one for whom a preneed contract is entered into or the
135-20 successor-in-interest of a life insurance policy.
136-21 "(7)(12) BOARD. The Alabama Board of Funeral
137-22 Service.
138-23 "(13) BRANCH. Any person or entity that is part of a
139-24 common business enterprise that has a certificate of authority
140-25 issued pursuant to Article 5 and elects to operate under a
141-26 name other than that of the common business enterprise.
142-Page 5 1 "(14) BURIAL. The placement of human remains in a
143-2 grave space or lawn crypt.
144-3 "(8)(15) CASH ADVANCE ITEMS. Any item of service or
145-4 merchandise described to a purchaser using the term cash
146-5 advance, accommodation, cash disbursement, or similar term. A
147-6 cash advance item is also any item obtained from a third party
148-7 and paid for by a funeral provider or a seller on behalf of a
149-8 purchaser. Cash advance items include, but are not limited to,
150-9 all of the following:
151-10 "a. Cemetery or crematory services.
152-11 "b. Pallbearers.
153-12 "c. Public, or other, transportation.
154-13 "d. Clergy honoraria.
155-14 "e. Flowers.
156-15 "f. Musicians or singers.
157-16 "g. Nurses.
158-17 "h. Obituary notices.
159-18 "i. Funeral programs.
160-19 "j. Gratuities.
161-20 "k. Death certificates.
162-21 "l. Outer burial containers.
163-22 "m. Cemetery plots.
164-23 "n. Escorts.
165-24 "(9)(16) CASKET. A rigid container that is designed
166-25 for the encasement of human remains, usually constructed of
167-26 wood, metal, or similar material, and ornamented and lined
168-27 with fabric.
169-Page 6 1 "(10)(17) CEMETERY. A place established, maintained,
170-2 managed, operated, or improved and which is dedicated to and
171-3 used or intended to be used for the permanent interment of
172-4 human remains and their memorialization. It may be either land
173-5 or earth interment; a columbarium; a mausoleum for vault or
174-6 crypt entombment; a structure or place used or intended to be
175-7 used for the interment of cremated remains; cryogenic storage;
176-8 or any combination of one or more thereof.
177-9 "(11)(18) CEMETERY AUTHORITY. Any individual,
178-10 person, firm, profit or nonprofit corporation, trustee,
179-11 partnership, society, religious society, church association or
180-12 denomination, municipality, or other group or entity, however
181-13 organized, insofar as they or any of them may now or hereafter
182-14 establish, own, operate, lease, control, or manage one or more
183-15 cemeteries, burial parks, mausoleums, columbariums, or any
184-16 combination or variation thereof, or hold lands or structures
185-17 for burial grounds or burial purposes in this state and engage
186-18 in the operation of a cemetery, including any one or more of
187-19 the following: The care and maintenance of a cemetery; the
188-20 interment, entombment, and memorialization of the human dead
189-21 in a cemetery; the sale, installation, care, maintenance, or
190-22 any combination thereof, with respect of monuments, markers,
191-23 foundations, memorials, burial vaults, urns, crypts,
192-24 mausoleums, columbariums, flower vases, floral arrangements,
193-25 and other cemetery accessories, for installation or use within
194-26 a cemetery; and the supervision and conduct of funeral and
195-27 burial services within the bounds of the cemetery.
196-Page 7 1 "(19) CEMETERY MERCHANDISE. Any personal property
197-2 offered for sale, contracted for sale, or sold for use in
198-3 connection with the burial, final disposition,
199-4 memorialization, interment, entombment, or inurnment of human
200-5 remains by a cemetery authority. The term specifically
201-6 includes, but is not limited to, the casket, the alternative
202-7 container, the outer burial container, and the memorial.
203-8 "(20) CEMETERY SERVICES. At need or preneed services
204-9 provided by a cemetery authority for interment, entombment,
205-10 inurnment, and installation of cemetery merchandise.
206-11 "(21) CERTIFICATE HOLDER. A funeral establishment,
207-12 cemetery authority, third-party seller, or any other person to
208-13 whom a valid certificate of authority to sell preneed
209-14 contracts has been granted by the board.
210-15 "(22) COLUMBARIUM. A structure or room or space in a
211-16 building or structure used or intended to be used for the
212-17 inurnment of cremated remains.
213-18 "(12)(23) CONVICTION. The entry of a plea of guilty
214-19 or a guilty verdict rendered by any court of competent
215-20 jurisdiction, excluding traffic violations.
216-21 "(13)(24) CREMATED REMAINS. Human remains recovered
217-22 after the completion of the cremation process, including
218-23 pulverization, which leaves only bone fragments reduced to
219-24 unidentifiable dimensions, and the residue of any foreign
220-25 materials that were cremated with the human remains.
221-26 "(25) CREMATED REMAINS CONTAINER. A receptacle in
222-27 which cremated remains are placed.
223-Page 8 1 "(14)(26) CREMATION. The technical irreversible
224-2 process, using heat, flames, or chemical agents, that reduces
225-3 human remains to bone fragments. The reduction takes place
226-4 through heat and evaporation. Cremation shall include the
227-5 processing, and may include the pulverization, of the bone
228-6 fragments. Cremation is a process and is a method of final
229-7 disposition.
230-8 "(15)(27) CREMATIONIST. A person licensed by the
231-9 board to perform the procedure of cremation.
232-10 "(16)(28) CREMATION CHAMBER. The retort or vessel
233-11 used to reduce human remains to bone fragments.
234-12 "(17)(29) CREMATION CONTAINER. The container in
235-13 which human remains are transported to a crematory, in which
236-14 human remains are placed in upon arrival at a crematory, or
237-15 for storage and placement in a cremation chamber for
238-16 cremation.
239-17 "(18)(30) CREMATORY. A building or portion of a
240-18 building that houses a cremation chamber and that may house a
241-19 holding facility for purposes of cremation and as part of a
242-20 funeral establishment.
243-21 "(31) CREMATORY AUTHORITY. Any person who owns or
244-22 controls a crematory.
245-23 "(32) DEATH CERTIFICATE. A legal document containing
246-24 vital statistics pertaining to the life and death of the
247-25 deceased.
248-26 "(33) DECEASED or DECEDENT. One who is no longer
249-27 living.
250-Page 9 1 "(19)(34) EMBALMER. Any person engaged or holding
251-2 himself or herself out as engaged in the business, practice,
252-3 science, or profession of embalming, whether on his or her own
253-4 behalf or in the employ of a registered and licensed funeral
254-5 director.
255-6 "(20)(35) EMBALMING. The practice, science, or
256-7 profession, as commonly practiced, of preserving,
257-8 disinfecting, and preparing by application of chemicals or
258-9 other effectual methods, human dead for burial, cremation, or
259-10 transportation.
260-11 "(36) ENCASEMENT. The placement of human remains in
261-12 a rigid container including, but not limited to, a casket or
262-13 urn.
263-14 "(37) ENDOWMENT CARE. The maintenance and repair of
264-15 all places in a cemetery, subject to the rules of the cemetery
265-16 authority. The term may also be referred to as endowed care,
266-17 perpetual care, improvement care, or permanent care.
267-18 "(38) ENDOWMENT CARE TRUST FUND. An irrevocable
268-19 trust fund set aside by law with a trustee, along with the
269-20 income therefrom, to provide for the endowment care of a
270-21 cemetery.
271-22 "(39) ENTOMBMENT. The act of placing human remains
272-23 in a mausoleum crypt.
273-24 "(40) FINAL DISPOSITION. The lawful disposal of
274-25 human remains whether by interment, cremation, or other
275-26 method.
276-Page 10 1 "(21)(41) FUNERAL. A ceremony for celebrating,
277-2 sanctifying, or remembering the life of a person who has died.
278-3 A funeral may be divided into the following two parts:
279-4 "a. The funeral service, which may take place at a
280-5 funeral home, church, or other place.
281-6 "b. The committal service or final disposition,
282-7 which may take place by the grave, tomb, mausoleum, or
283-8 crematory where the body of the decedent is to be buried or
284-9 cremated.
285-10 "(22)(42) FUNERAL ARRANGEMENTS. The completing of
286-11 funeral service arrangements, cremation arrangements, and the
287-12 financial details of a funeral at the time of death. The term
288-13 includes the collection of vital statistic information, death
289-14 certificate information, obituary and funeral notice
290-15 completion, the completion of a statement of funeral goods and
291-16 services selected, organizing of funeral and memorial services
292-17 for families, and the ordering of cash advance items.
293-18 "(43) FUNERAL BENEFICIARY. The person or persons who
294-19 will receive the benefit of the funeral and cemetery goods and
295-20 services to be delivered under a preneed contract at the time
296-21 of his, her, or their death.
297-22 "(23)(44) FUNERAL DIRECTING. The practice of
298-23 directing or supervising funerals, the practice of preparing
299-24 dead human bodies for burial by means other than embalming, or
300-25 the preparation for the final disposition of dead human
301-26 bodies; the making of funeral arrangements or providing for
302-27 funeral services or the making of financial arrangements for
303-Page 11 1 the rendering of these services; the provision or maintenance
304-2 of a place for the preparation for final disposition of dead
305-3 human bodies; or the use of the terms funeral director,
306-4 undertaker, mortician, funeral parlor, or any other term from
307-5 which can be implied the practice of funeral directing; or the
308-6 holding out to the public that one is a funeral director or
309-7 engaged in a practice described in this subdivision.
310-8 "(24)(45) FUNERAL DIRECTOR. A person required to be
311-9 licensed to practice the profession of funeral directing under
312-10 the laws of this state, who consults with the public, who
313-11 plans details of funeral services with members of the family
314-12 and minister or any other person responsible for such
315-13 planning, or who directs, is in charge, or apparent charge of,
316-14 and supervises funeral service in a funeral home, church, or
317-15 other place; who enters into the making, negotiation, or
318-16 completion of financial arrangements for funeral services, or
319-17 who uses in connection with the profession of funeral
320-18 directing the terms funeral director, undertaker, funeral
321-19 counselor, mortician, or any other term or picture or
322-20 combination thereof when considered in context in which used,
323-21 from which can be implied the practicing of the profession of
324-22 funeral directing or that the person using such term or
325-23 picture can be implied to be holding himself or herself out to
326-24 the public as being engaged in the profession of funeral
327-25 directing; and for all purposes under Alabama law, a funeral
328-26 director is considered a professional. For the purposes of
329-Page 12 1 this chapter, the term does not include any cemetery
330-2 authority.
331-3 "(25)(46) FUNERAL ESTABLISHMENTS. The term includes
332-4 any funeral home or mortuary service located at a specific
333-5 street address where the profession of funeral directing,
334-6 embalming, or cremation is practiced in the care, planning,
335-7 and preparation for burial, cremation, or transportation of
336-8 human dead. A funeral establishment shall consist of and
337-9 maintain all of the following facilities:
338-10 "a. A preparation room equipped with sanitary
339-11 nonporous floor and walls, necessary drainage and ventilation,
340-12 and containing operating embalming equipment, necessary
341-13 approved tables, instruments, hot and cold running water,
342-14 containers or receptacles for soiled linen or clothing, and
343-15 supplies for the preparation and embalming of dead human
344-16 bodies for burial, cremation, and transportation.
345-17 "b. A display room containing a stock of adult
346-18 caskets and funeral supplies displayed in full size, cuts,
347-19 photographs, or electronic images. At no time shall less than
348-20 eight different adult size caskets be on the premises.
349-21 "c. At least one operating funeral coach or hearse
350-22 properly licensed and equipped for transporting human remains
351-23 in a casket or urn.
352-24 "d. If engaged in the practice of cremation, the
353-25 establishment shall satisfy all crematory requirements
354-26 provided in this chapter and have on site an adequate supply
355-27 of urns for display and sale.
356-Page 13 1 "e. A room suitable for public viewing or other
357-2 funeral services that is able to accommodate a minimum of 100
358-3 people 1,000 square feet.
359-4 "f. An office for holding arrangement conferences
360-5 with relatives or authorizing agents.
361-6 "(47) FUNERAL SERVICE. At need or preneed services
362-7 provided by a funeral establishment in connection with funeral
363-8 directing, final disposition of human remains, or installation
364-9 of memorials.
365-10 "(26)(48) FUNERAL SUPPLIES or FUNERAL MERCHANDISE.
366-11 Caskets made of any material for use in the burial or
367-12 transportation of human dead; outer receptacles, Any item
368-13 offered for sale, contracted for sale, or sold for use in
369-14 connection with funeral directing when sold by a funeral
370-15 director, including, but not limited to, caskets, alternative
371-16 containers, outer burial vaults and containers, urns, for
372-17 cremated human remains; memorials, clothing used to dress
373-18 human dead when sold by a funeral director;, and all equipment
374-19 and accouterments normally required for the preparation for
375-20 burial or funeral and other final disposition of human dead.
376-21 "(49) GRAVE SPACE. A space of ground in a cemetery
377-22 that is used or intended to be used for in-ground burial.
378-23 "(27)(50) GROSS IMMORALITY. Willful, flagrant, or
379-24 shameful immorality or showing a moral indifference to the
380-25 opinions of the good and respectable members of the community
381-26 and to the just obligations of the position held by the
382-27 offender.
383-Page 14 1 "(28)(51) HOLDING ROOM. Either of the following:
384-2 "a. A room within a funeral establishment that
385-3 satisfies the requirements of a branch location as provided in
386-4 this chapter or board rule, for the retention of human remains
387-5 before final disposition.
388-6 "b. A room within a crematory facility, designated
389-7 for the retention of human remains before and after cremation,
390-8 that is not accessible to the public.
391-9 "(52) HUMAN REMAINS. The body of a decedent in any
392-10 stage of decomposition, including cremated remains.
393-11 "(53) INTERMENT. The final disposition of human
394-12 remains by burial, burial at sea, entombment, or inurnment.
395-13 "(54) INTERMENT RIGHT. The right to inter human
396-14 remains in a particular interment space in a cemetery.
397-15 "(55) INTERMENT SPACE. A space intended for the
398-16 final disposition of human remains including, but not limited
399-17 to, a grave space, mausoleum crypt, niche, and below-ground
400-18 crypt.
401-19 "(56) INURNMENT. The act of placing cremated remains
402-20 in a receptacle including, but not limited to, an urn and
403-21 depositing it in a niche.
404-22 "(57) LICENSEE. Any individual, firm, corporation,
405-23 partnership, joint venture, or limited liability company which
406-24 obtains a license, certificate, or registration in accordance
407-25 with this chapter.
408-26 "(29)(58) MANAGING CREMATIONIST. A licensed funeral
409-27 director and cremationist who has full charge, control, and
410-Page 15 1 supervision of all activities involving cremation at a funeral
411-2 establishment or crematory.
412-3 "(30)(59) MANAGING EMBALMER. A licensed embalmer who
413-4 has full charge, control, and supervision of all activities
414-5 involving the preparation room and embalming.
415-6 "(31)(60) MANAGING FUNERAL DIRECTOR. A licensed
416-7 funeral director who has full charge, control, and supervision
417-8 of all activities involving funeral directing for a funeral
418-9 establishment.
419-10 "(61) MAUSOLEUM. A chamber or structure used or
420-11 intended to be used for entombment.
421-12 "(62) MAUSOLEUM CRYPT. A chamber of a mausoleum of
422-13 sufficient size for entombment of human remains.
423-14 "(63) MEMORIAL. Any product, other than a mausoleum
424-15 or columbarium, used for identifying an interment space or for
425-16 commemoration of the life, deeds, or career of some decedent
426-17 including, but not limited to, a monument, marker, niche
427-18 plate, urn garden plaque, crypt plate, cenotaph, marker bench,
428-19 and vase.
429-20 "(64) MEMORIAL RETAILER. Any person offering or
430-21 selling memorials at retail to the public.
431-22 "(65) MEMORIALIZATION. Any permanent system designed
432-23 to mark or record the names and other data pertaining to a
433-24 decedent.
434-25 "(32)(66) MORAL TURPITUDE. Any unlawful sexual or
435-26 violent act, or any act involving theft, theft of services,
436-27 theft by deception, extortion, receiving stolen property,
437-Page 16 1 identity theft, forgery, fraud, tampering with records,
438-2 bribery, perjury, or any similar act in any jurisdiction.
439-3 "(33)(67) MORTUARY SCIENCE. The scientific,
440-4 professional, and practical aspects, with due consideration
441-5 given to accepted practices, covering the care, preparation
442-6 for burial, or transportation of dead human bodies, which
443-7 shall include the preservation and sanitation of the bodies
444-8 and restorative art and those aspects related to public
445-9 health, jurisprudence, and good business administration.
446-10 "(34)(68) MORTUARY SERVICE. A location with a
447-11 specific street address where embalming or cremation, or both,
448-12 is practiced for a licensed funeral establishment and where no
449-13 services or merchandise are sold directly or at retail to the
450-14 public. A mortuary service shall consist of and maintain all
451-15 of the following facilities:
452-16 "a. A preparation room equipped with sanitary
453-17 nonporous floor and walls, operating embalming equipment, and
454-18 necessary drainage and ventilation and containing necessary
455-19 approved tables, instruments, hot and cold running water,
456-20 containers or receptacles for soiled linen or clothing, and
457-21 supplies for the preparation and embalming of dead human
458-22 bodies for burial, cremation, and transportation.
459-23 "b. At least one operating motor vehicle properly
460-24 licensed and equipped for transporting human remains in a
461-25 casket or urn.
462-Page 17 1 "c. If engaged in the practice of cremation, the
463-2 establishment shall satisfy all requirements for a crematory
464-3 provided in this chapter.
465-4 "(69) NICHE. A space usually within a columbarium
466-5 used or intended to be used for inurnment of cremated remains.
467-6 "(35)(70) OPERATOR. A person, corporation, firm,
468-7 legal representative, managing funeral director, general
469-8 manager, or other organization owning or operating a funeral
470-9 establishment or cemetery.
471-10 "(71) OUTER BURIAL CONTAINER. A container that is
472-11 designed for placement in the grave space around the casket or
473-12 the urn including, but not limited to, containers commonly
474-13 known as burial vaults, grave boxes, and grave liners.
475-14 "(72) PERSON. Any individual, firm, corporation,
476-15 partnership, joint venture, limited liability company,
477-16 association, trustee, government or governmental subdivision,
478-17 agency, or other entity, or any combination thereof.
479-18 "(36)(73) PRACTICAL EMBALMER. Any person who has
480-19 been actively and continuously engaged or employed in the
481-20 practice of embalming under the supervision of a licensed
482-21 embalmer for four consecutive years immediately preceding May
483-22 1, 1975, and has been issued a license as a practical embalmer
484-23 under the grandfather provisions of this chapter.
485-24 "(74) PREARRANGEMENT. The term applied to completing
486-25 the details for selection of merchandise or services on a
487-26 preneed basis, which may or may not include prefunding or
488-27 prepayment.
489-Page 18 1 "(75) PREDEVELOPED. Designated areas or buildings
490-2 within a cemetery that have been mapped and planned for future
491-3 construction but are not yet completed.
492-4 "(76) PREDEVELOPED INTERMENT SPACE. An interment
493-5 space that is planned for future construction but is not yet
494-6 completed.
495-7 "(77) PREFUND. The term applied to completing the
496-8 financial details of a prearrangement, which include
497-9 prefunding or prepayment.
498-10 "(78) PRENEED. Any time prior to death.
499-11 "(79) PRENEED CONTRACT. A written contract to
500-12 purchase funeral merchandise, funeral services, cemetery
501-13 merchandise, or cemetery services from the seller on a preneed
502-14 basis.
503-15 "(80) PRENEED CONTRACT TRUST FUND. The funds
504-16 received pursuant to a preneed contract which are required by
505-17 law to be held in trust until the merchandise or services
506-18 purchased pursuant to the contract are delivered or provided
507-19 or until otherwise lawfully withdrawn.
508-20 "(81) PRENEED SALES AGENT. A person who is in the
509-21 business of selling preneed contracts.
510-22 "(37)(82) PROCESSING or PULVERIZATION. The reduction
511-23 of identifiable bone fragments after the completion of the
512-24 cremation process to unidentifiable bone fragments or
513-25 granulated particles by manual or mechanical means.
514-Page 19 1 "(83) PROVIDER. The person, who may or may not be
515-2 the seller, who actually provides merchandise and services
516-3 under the terms of a preneed contract.
517-4 "(84) PURCHASE PRICE. The amount paid by the
518-5 purchaser for merchandise and services purchased under a
519-6 preneed contract, exclusive of finance charges, sales tax,
520-7 charges relating to interment rights, arrangement conference
521-8 fees, or charges for credit life insurance.
522-9 "(85) PURCHASER. The person who purchases a preneed
523-10 contract either on his or her behalf or on behalf of a
524-11 third-party beneficiary.
525-12 "(86) RELIGIOUS INSTITUTION. An organization formed
526-13 primarily for religious purposes which has applied and
527-14 qualified for exemption from federal income tax as an exempt
528-15 organization under Section 501(c)(3) of the Internal Revenue
529-16 Code of 1986, as amended.
530-17 "(87) SCATTERING. The lawful dispersion of cremated
531-18 remains.
532-19 "(88) SELLER. Any person offering or selling
533-20 merchandise or services on a preneed basis including, but not
534-21 limited to, funeral establishments, cemetery authorities,
535-22 crematory authorities, and memorial retailers.
536-23 "(89) SPECIAL CARE. Any care provided, or to be
537-24 provided, that is supplemental to, or in excess of, endowment
538-25 care, in accordance with the specific directions of any donor
539-26 of funds for those purposes.
540-Page 20 1 "(90) SUCCESSOR-IN-INTEREST. A person who lawfully
541-2 follows another in ownership or control of property or rights.
542-3 "(38)(91) TEMPORARY CONTAINER. A receptacle for
543-4 cremated remains, usually composed of cardboard, plastic, or
544-5 similar material, that can be closed in a manner that prevents
545-6 the leakage or spillage of the cremated remains or the
546-7 entrance of foreign material, and is a single container of
547-8 sufficient size to hold the cremated remains until an urn is
548-9 acquired or the cremated remains are scattered or buried.
549-10 "(92) THIRD-PARTY SELLER. Any person, who is not a
550-11 funeral establishment or a cemetery authority, engaged in the
551-12 sale of preneed funeral merchandise or cemetery merchandise.
552-13 "(93) TRUSTEE. Any person, state or national bank,
553-14 trust company, or federally insured savings and loan
554-15 association lawfully appointed as fiduciary over funds
555-16 deposited by one or more purchasers of a preneed contract or
556-17 deposited pursuant to an endowment care trust fund. The term
557-18 does not refer to a board of trustees.
558-19 "(39)(94) URN. A receptacle designed to encase
559-20 cremated remains.
560-21 "(b) Nothing in this chapter shall require a funeral
561-22 director or funeral establishment to have or provide a chapel
562-23 or to restrict the conduct of funeral services from a church
563-24 or chapel.
564-25 "§34-13-20.
565-26 "(a) There is established the Alabama Board of
566-27 Funeral Service, consisting of nine members, each of whom
567-Page 21 1 shall be citizens of the United States and residents of the
568-2 State of Alabama.
569-3 "(b) The appointing authorities shall coordinate
570-4 their appointments to assure board membership is inclusive and
571-5 reflects the racial, gender, geographic, urban/rural, and
572-6 economic diversity of the state.
573-7 "(c) Commencing on January 1, 2019, as the terms of
574-8 the members serving on the board on August 1, 2017, expire,
575-9 the membership of the board shall be reconstituted to consist
576-10 of seven professional members and two consumer members.
577-11 "(1) Each professional member of the board shall be
578-12 a citizen of the United States, a resident of Alabama, and
579-13 licensed and in good standing with the board as an embalmer or
580-14 funeral director at the time of appointment and during the
581-15 entire term of office. Professional members of the board shall
582-16 be appointed by the Governor pursuant to subsection (e). As
583-17 the terms of the members serving on the board on the effective
584-18 date of the act adding this sentence expire, the professional
585-19 membership of the board shall be appointed to reflect the
586-20 following:
587-21 "a. Four Three of the professional members of the
588-22 board shall hold a current license from the board to practice
589-23 embalming in the state, shall have been actively practicing
590-24 embalming in the state for the last 10 consecutive years
591-25 immediately preceding appointment, and shall be engaged in the
592-26 practice of embalming at the time of appointment to the board.
593-Page 22 1 "b. Three Four of the professional members of the
14+8 SYNOPSIS: Under existing law, the Alabama Board of
15+9 Funeral Service licenses and regulates funeral
16+10 establishments, funeral directors, and embalmers.
17+11 This bill would provide further for
18+12 definitions, the membership of the board, and the
19+13 imposition and collection of disposition fees.
20+14 This bill would also establish the Alabama
21+15 Preneed Funeral and Cemetery Act of 2022, and would
22+16 transfer the regulation of preneed contracts
23+17 pursuant to the Preneed Funeral and Cemetery Act
24+18 from the Commissioner and the Department of
25+19 Insurance to the board.
26+20 Amendment 621 of the Constitution of Alabama
27+21 of 1901, now appearing as Section 111.05 of the
28+22 Official Recompilation of the Constitution of
29+23 Alabama of 1901, as amended, prohibits a general
30+24 law whose purpose or effect would be to require a
31+25 new or increased expenditure of local funds from
32+26 becoming effective with regard to a local
33+27 governmental entity without enactment by a 2/3 vote
34+Page 1 1 unless: it comes within one of a number of
35+2 specified exceptions; it is approved by the
36+3 affected entity; or the Legislature appropriates
37+4 funds, or provides a local source of revenue, to
38+5 the entity for the purpose.
39+6 The purpose or effect of this bill would be
40+7 to require a new or increased expenditure of local
41+8 funds within the meaning of the amendment. However,
42+9 the bill does not require approval of a local
43+10 governmental entity or enactment by a 2/3 vote to
44+11 become effective because it comes within one of the
45+12 specified exceptions contained in the amendment.
46+13
47+14 A BILL
48+15 TO BE ENTITLED
49+16 AN ACT
50+17
51+18 Relating to the Alabama Board of Funeral Service; to
52+19 amend Sections 34-13-1, 34-13-20, and 34-13-111, Code of
53+20 Alabama 1975, to provide further for definitions, the
54+21 membership of the board, and the imposition and collection of
55+22 disposition fees; to add Article 5 to Chapter 13, Title 34,
56+23 Code of Alabama 1975, by amending and renumbering Sections
57+24 27-17A-1, 27-17A-3, 27-17A-4, 27-17A-10 to 27-17A-25,
58+25 inclusive, 27-17A-30 to 27-17A-34, inclusive, and 27-17A-40 to
59+26 27-17A-57, inclusive, as Sections 34-13-170 to 34-13-172,
60+27 inclusive, 34-13-190 to 34-13-206, inclusive, 34-13-230 to
61+Page 2 1 34-13-234, inclusive, and 34-13-260 to 34-13-277, inclusive,
62+2 Code of Alabama 1975; to establish the Alabama Preneed Funeral
63+3 and Cemetery Act of 2022; to transfer the existing Preneed
64+4 Funeral and Cemetery Act, and the regulation of preneed
65+5 contracts, from the Commissioner and Department of Insurance
66+6 to the Alabama Board of Funeral Service; to make corresponding
67+7 technical changes; and to repeal Section 27-17A-2, Code of
68+8 Alabama 1975, relating to definitions; and in connection
69+9 therewith would have as its purpose or effect the requirement
70+10 of a new or increased expenditure of local funds within the
71+11 meaning of Amendment 621 of the Constitution of Alabama of
72+12 1901, now appearing as Section 111.05 of the Official
73+13 Recompilation of the Constitution of Alabama of 1901, as
74+14 amended.
75+15 BE IT ENACTED BY THE LEGISLATURE OF ALABAMA:
76+16 Section 1. Sections 34-13-1, 34-13-20, and
77+17 34-13-111, of the Code of Alabama 1975, are amended to read as
78+18 follows:
79+19 "§34-13-1.
80+20 "(a) For purposes of this chapter, the following
81+21 terms shall have the following meanings:
82+22 "(1) ACCREDITED SCHOOL or COLLEGE OF MORTUARY
83+23 SCIENCE. A school or college approved by the Alabama American
84+24 Board of Funeral Service and Education, or a successor
85+25 organization, which maintains a course of instruction of not
86+26 less than 48 calendar weeks or four academic quarters or
87+27 college terms and which gives a course of instruction in the
88+Page 3 1 fundamental subjects including, but not limited to, the
89+2 following:
90+3 "a. Mortuary management and administration.
91+4 "b. Legal medicine and toxicology as it pertains to
92+5 funeral directing.
93+6 "c. Public health, hygiene, and sanitary science.
94+7 "d. Mortuary science, to include embalming
95+8 technique, in all its aspects; chemistry of embalming, color
96+9 harmony; discoloration, its causes, effects, and treatment;
97+10 treatment of special cases; restorative art; funeral
98+11 management; and professional ethics.
99+12 "e. Anatomy and physiology.
100+13 "f. Chemistry, organic and inorganic.
101+14 "g. Pathology.
102+15 "h. Bacteriology.
103+16 "i. Sanitation and hygiene.
104+17 "j. Public health regulations.
105+18 "k. Other related to funeral service and mortuary
106+19 science education as approved by the American Board of Funeral
107+20 Service Education, or a successor organization, and other
108+21 courses of instruction in fundamental subjects as may be
109+22 prescribed by the Alabama Board of Funeral Service.
110+23 "(2) ALKALINE HYDROLYSIS. The technical process that
111+24 reduces human remains to bone fragments using heat, water, and
112+25 chemical agents.
113+26 "(3) ALTERNATIVE CONTAINER. A nonmetal receptacle or
114+27 enclosure, without ornamentation or a fixed interior lining,
115+Page 4 1 which is designed for the encasement of human remains and
116+2 which is made of cardboard, pressed-wood, composition
117+3 materials, with or without an outside covering, pouches of
118+4 canvas, or other materials.
119+5 "(3)(4) AMERICAN BOARD OF FUNERAL SERVICE EDUCATION.
120+6 That funeral service educational organization which is an
121+7 agency granted official recognition by the United States
122+8 Secretary of Education and which is composed of members
123+9 representing the American Association of College of Mortuary
124+10 Science, the Conference of Funeral Service Examining Board of
125+11 the United States, Inc., the National Association of Colleges
126+12 of Mortuary Science, and the University Mortuary Science
127+13 Education Association and which has as its object the
128+14 furtherance of education in the field of funeral service and
129+15 in fields necessary to, or allied with, the field of funeral
130+16 service, and further to formulate standards of funeral service
131+17 education and to grant accreditation to qualified schools and
132+18 colleges of mortuary science and to do all things incidental
133+19 to the foregoing The national academic accreditation agency
134+20 for college and university programs in funeral service and
135+21 mortuary science education. The accrediting function of the
136+22 American Board of Funeral Service Education is recognized by
137+23 the United States Department of Education and the Council on
138+24 Higher Education Accreditation.
139+25 "(4)(5) APPRENTICE EMBALMER or EMBALMER'S
140+26 APPRENTICE. Any person engaged in the study of the art of
141+Page 5 1 embalming under the instructions and supervision of a licensed
142+2 embalmer practicing in this state.
143+3 "(5)(6) APPRENTICE FUNERAL DIRECTOR or FUNERAL
144+4 DIRECTOR'S APPRENTICE. Any person operating under or in
145+5 association with a funeral director for the purpose of
146+6 learning the business or profession of funeral director, to
147+7 the end that he or she may become licensed under this chapter.
148+8 "(7) AT NEED. At the time of death or immediately
149+9 following death.
150+10 "(6)(8) AUTHORIZING AGENT. A person at least 18
151+11 years of age, except in the case of a surviving spouse or
152+12 parent, who is legally entitled to order the cremation or
153+13 final disposition of particular human remains.
154+14 "(9) BASIC SERVICES FEE. The fee for the
155+15 professional services of the funeral director and staff that
156+16 is added to the total cost of the funeral arrangements. The
157+17 term includes a charge for services performed in conducting
158+18 the arrangements conference, planning the funeral, securing
159+19 the necessary permits, preparing the notices, and coordinating
160+20 the cemetery or crematory arrangements.
161+21 "(10) BELOW-GROUND CRYPT. A preplaced enclosed
162+22 chamber, usually constructed of reinforced concrete, poured in
163+23 place or a precast unit installed in quantity, either
164+24 side-by-side or multiple depth, and covered by earth or sod
165+25 and known also as a lawn crypt or turf-top crypt.
166+Page 6 1 "(11) BENEFICIARY. One who benefits from an act,
167+2 such as one for whom a preneed contract is entered into or the
168+3 successor-in-interest of a life insurance policy.
169+4 "(7)(12) BOARD. The Alabama Board of Funeral
170+5 Service.
171+6 "(13) BRANCH. Any person or entity that is part of a
172+7 common business enterprise that has a certificate of authority
173+8 issued pursuant to Article 5 and elects to operate under a
174+9 name other than that of the common business enterprise.
175+10 "(14) BURIAL. The placement of human remains in a
176+11 grave space or lawn crypt.
177+12 "(8)(15) CASH ADVANCE ITEMS. Any item of service or
178+13 merchandise described to a purchaser using the term cash
179+14 advance, accommodation, cash disbursement, or similar term. A
180+15 cash advance item is also any item obtained from a third party
181+16 and paid for by a funeral provider or a seller on behalf of a
182+17 purchaser. Cash advance items include, but are not limited to,
183+18 all of the following:
184+19 "a. Cemetery or crematory services.
185+20 "b. Pallbearers.
186+21 "c. Public, or other, transportation.
187+22 "d. Clergy honoraria.
188+23 "e. Flowers.
189+24 "f. Musicians or singers.
190+25 "g. Nurses.
191+26 "h. Obituary notices.
192+27 "i. Funeral programs.
193+Page 7 1 "j. Gratuities.
194+2 "k. Death certificates.
195+3 "l. Outer burial containers.
196+4 "m. Cemetery plots.
197+5 "n. Escorts.
198+6 "(9)(16) CASKET. A rigid container that is designed
199+7 for the encasement of human remains, usually constructed of
200+8 wood, metal, or similar material, and ornamented and lined
201+9 with fabric.
202+10 "(10)(17) CEMETERY. A place established, maintained,
203+11 managed, operated, or improved and which is dedicated to and
204+12 used or intended to be used for the permanent interment of
205+13 human remains and their memorialization. It may be either land
206+14 or earth interment; a columbarium; a mausoleum for vault or
207+15 crypt entombment; a structure or place used or intended to be
208+16 used for the interment of cremated remains; cryogenic storage;
209+17 or any combination of one or more thereof.
210+18 "(11)(18) CEMETERY AUTHORITY. Any individual,
211+19 person, firm, profit or nonprofit corporation, trustee,
212+20 partnership, society, religious society, church association or
213+21 denomination, municipality, or other group or entity, however
214+22 organized, insofar as they or any of them may now or hereafter
215+23 establish, own, operate, lease, control, or manage one or more
216+24 cemeteries, burial parks, mausoleums, columbariums, or any
217+25 combination or variation thereof, or hold lands or structures
218+26 for burial grounds or burial purposes in this state and engage
219+27 in the operation of a cemetery, including any one or more of
220+Page 8 1 the following: The care and maintenance of a cemetery; the
221+2 interment, entombment, and memorialization of the human dead
222+3 in a cemetery; the sale, installation, care, maintenance, or
223+4 any combination thereof, with respect of monuments, markers,
224+5 foundations, memorials, burial vaults, urns, crypts,
225+6 mausoleums, columbariums, flower vases, floral arrangements,
226+7 and other cemetery accessories, for installation or use within
227+8 a cemetery; and the supervision and conduct of funeral and
228+9 burial services within the bounds of the cemetery.
229+10 "(19) CEMETERY MERCHANDISE. Any personal property
230+11 offered for sale, contracted for sale, or sold for use in
231+12 connection with the burial, final disposition,
232+13 memorialization, interment, entombment, or inurnment of human
233+14 remains by a cemetery authority. The term specifically
234+15 includes, but is not limited to, the casket, the alternative
235+16 container, the outer burial container, and the memorial.
236+17 "(20) CEMETERY SERVICES. At need or preneed services
237+18 provided by a cemetery authority for interment, entombment,
238+19 inurnment, and installation of cemetery merchandise.
239+20 "(21) CERTIFICATE HOLDER. A funeral establishment,
240+21 cemetery authority, third-party seller, or any other person to
241+22 whom a valid certificate of authority to sell preneed
242+23 contracts has been granted by the board.
243+24 "(22) COLUMBARIUM. A structure or room or space in a
244+25 building or structure used or intended to be used for the
245+26 inurnment of cremated remains.
246+Page 9 1 "(12)(23) CONVICTION. The entry of a plea of guilty
247+2 or a guilty verdict rendered by any court of competent
248+3 jurisdiction, excluding traffic violations.
249+4 "(13)(24) CREMATED REMAINS. Human remains recovered
250+5 after the completion of the cremation process, including
251+6 pulverization, which leaves only bone fragments reduced to
252+7 unidentifiable dimensions, and the residue of any foreign
253+8 materials that were cremated with the human remains.
254+9 "(25) CREMATED REMAINS CONTAINER. A receptacle in
255+10 which cremated remains are placed.
256+11 "(14)(26) CREMATION. The technical irreversible
257+12 process, using heat, flames, or chemical agents, that reduces
258+13 human remains to bone fragments. The reduction takes place
259+14 through heat and evaporation. Cremation shall include the
260+15 processing, and may include the pulverization, of the bone
261+16 fragments. Cremation is a process and is a method of final
262+17 disposition.
263+18 "(15)(279) CREMATIONIST. A person licensed by the
264+19 board to perform the procedure of cremation.
265+20 "(16)(28) CREMATION CHAMBER. The retort or vessel
266+21 used to reduce human remains to bone fragments.
267+22 "(17)(29) CREMATION CONTAINER. The container in
268+23 which human remains are transported to a crematory, in which
269+24 human remains are placed in upon arrival at a crematory, or
270+25 for storage and placement in a cremation chamber for
271+26 cremation.
272+Page 10 1 "(18)(30) CREMATORY. A building or portion of a
273+2 building that houses a cremation chamber and that may house a
274+3 holding facility for purposes of cremation and as part of a
275+4 funeral establishment.
276+5 "(31) CREMATORY AUTHORITY. Any person who owns or
277+6 controls a crematory.
278+7 "(32) DEATH CERTIFICATE. A legal document containing
279+8 vital statistics pertaining to the life and death of the
280+9 deceased.
281+10 "(33) DECEASED or DECEDENT. One who is no longer
282+11 living.
283+12 "(34) DISPOSITION FEE. A fee charged for each final
284+13 disposition arranged or performed in the state.
285+14 "(19)(35) EMBALMER. Any person engaged or holding
286+15 himself or herself out as engaged in the business, practice,
287+16 science, or profession of embalming, whether on his or her own
288+17 behalf or in the employ of a registered and licensed funeral
289+18 director.
290+19 "(20)(36) EMBALMING. The practice, science, or
291+20 profession, as commonly practiced, of preserving,
292+21 disinfecting, and preparing by application of chemicals or
293+22 other effectual methods, human dead for burial, cremation, or
294+23 transportation.
295+24 "(37) ENCASEMENT. The placement of human remains in
296+25 a rigid container including, but not limited to, a casket or
297+26 urn.
298+Page 11 1 "(38) ENDOWMENT CARE. The maintenance and repair of
299+2 all places in a cemetery, subject to the rules of the cemetery
300+3 authority. The term may also be referred to as endowed care,
301+4 perpetual care, improvement care, or permanent care.
302+5 "(39) ENDOWMENT CARE TRUST FUND. An irrevocable
303+6 trust fund set aside by law with a trustee, along with the
304+7 income therefrom, to provide for the endowment care of a
305+8 cemetery.
306+9 "(40) ENTOMBMENT. The act of placing human remains
307+10 in a mausoleum crypt.
308+11 "(41) FINAL DISPOSITION. The lawful disposal of
309+12 human remains whether by interment, cremation, or other
310+13 method.
311+14 "(21)(42) FUNERAL. A ceremony for celebrating,
312+15 sanctifying, or remembering the life of a person who has died.
313+16 A funeral may be divided into the following two parts:
314+17 "a. The funeral service, which may take place at a
315+18 funeral home, church, or other place.
316+19 "b. The committal service or disposition, which may
317+20 take place by the grave, tomb, mausoleum, or crematory where
318+21 the body of the decedent is to be buried or cremated.
319+22 "(22)(43) FUNERAL ARRANGEMENTS. The completing of
320+23 funeral service arrangements, cremation arrangements, and the
321+24 financial details of a funeral at the time of death. The term
322+25 includes the collection of vital statistic information, death
323+26 certificate information, obituary and funeral notice
324+27 completion, the completion of a statement of funeral goods and
325+Page 12 1 services selected, organizing of funeral and memorial services
326+2 for families, and the ordering of cash advance items.
327+3 "(44) FUNERAL BENEFICIARY. The person or persons who
328+4 will receive the benefit of the funeral and cemetery goods and
329+5 services to be delivered under a preneed contract at the time
330+6 of his, her, or their death.
331+7 "(23)(45) FUNERAL DIRECTING. The practice of
332+8 directing or supervising funerals, the practice of preparing
333+9 dead human bodies for burial by means other than embalming, or
334+10 the preparation for the disposition of dead human bodies; the
335+11 making of funeral arrangements or providing for funeral
336+12 services or the making of financial arrangements for the
337+13 rendering of these services; the provision or maintenance of a
338+14 place for the preparation for disposition of dead human
339+15 bodies; or the use of the terms funeral director, undertaker,
340+16 mortician, funeral parlor, or any other term from which can be
341+17 implied the practice of funeral directing; or the holding out
342+18 to the public that one is a funeral director or engaged in a
343+19 practice described in this subdivision.
344+20 "(24)(46) FUNERAL DIRECTOR. A person required to be
345+21 licensed to practice the profession of funeral directing under
346+22 the laws of this state, who consults with the public, who
347+23 plans details of funeral services with members of the family
348+24 and minister or any other person responsible for such
349+25 planning, or who directs, is in charge, or apparent charge of,
350+26 and supervises funeral service in a funeral home, church, or
351+27 other place; who enters into the making, negotiation, or
352+Page 13 1 completion of financial arrangements for funeral services, or
353+2 who uses in connection with the profession of funeral
354+3 directing the terms funeral director, undertaker, funeral
355+4 counselor, mortician, or any other term or picture or
356+5 combination thereof when considered in context in which used,
357+6 from which can be implied the practicing of the profession of
358+7 funeral directing or that the person using such term or
359+8 picture can be implied to be holding himself or herself out to
360+9 the public as being engaged in the profession of funeral
361+10 directing; and for all purposes under Alabama law, a funeral
362+11 director is considered a professional. For the purposes of
363+12 this chapter, the term does not include any cemetery
364+13 authority.
365+14 "(25)(47) FUNERAL ESTABLISHMENTS. The term includes
366+15 any funeral home or mortuary service located at a specific
367+16 street address where the profession of funeral directing,
368+17 embalming, or cremation is practiced in the care, planning,
369+18 and preparation for burial, cremation, or transportation of
370+19 human dead. A funeral establishment shall consist of and
371+20 maintain all of the following facilities:
372+21 "a. A preparation room equipped with sanitary
373+22 nonporous floor and walls, necessary drainage and ventilation,
374+23 and containing operating embalming equipment, necessary
375+24 approved tables, instruments, hot and cold running water,
376+25 containers or receptacles for soiled linen or clothing, and
377+26 supplies for the preparation and embalming of dead human
378+27 bodies for burial, cremation, and transportation.
379+Page 14 1 "b. A display room containing a stock of adult
380+2 caskets and funeral supplies displayed in full size, cuts,
381+3 photographs, or electronic images. At no time shall less than
382+4 eight different adult size caskets be on the premises.
383+5 "c. At least one operating funeral coach or hearse
384+6 properly licensed and equipped for transporting human remains
385+7 in a casket or urn.
386+8 "d. If engaged in the practice of cremation, the
387+9 establishment shall satisfy all crematory requirements
388+10 provided in this chapter and have on site an adequate supply
389+11 of urns for display and sale.
390+12 "e. A room suitable for public viewing or other
391+13 funeral services that is able to accommodate a minimum of 100
392+14 people 1,000 square feet.
393+15 "f. An office for holding arrangement conferences
394+16 with relatives or authorizing agents.
395+17 "(48) FUNERAL SERVICE. At need or preneed services
396+18 provided by a funeral establishment in connection with funeral
397+19 directing, disposition of human remains, or installation of
398+20 memorials.
399+21 "(26)(49) FUNERAL SUPPLIES or FUNERAL MERCHANDISE.
400+22 Caskets made of any material for use in the burial or
401+23 transportation of human dead; outer receptacles, Any item
402+24 offered for sale, contracted for sale, or sold for use in
403+25 connection with funeral directing when sold by a funeral
404+26 director, including, but not limited to, caskets, alternative
405+27 containers, outer burial vaults and containers, urns, for
406+Page 15 1 cremated human remains; memorials, clothing used to dress
407+2 human dead when sold by a funeral director;, and all equipment
408+3 and accouterments normally required for the preparation for
409+4 burial or funeral and other disposition of human dead.
410+5 "(50) GRAVE SPACE. A space of ground in a cemetery
411+6 that is used or intended to be used for in-ground burial.
412+7 "(27)(51) GROSS IMMORALITY. Willful, flagrant, or
413+8 shameful immorality or showing a moral indifference to the
414+9 opinions of the good and respectable members of the community
415+10 and to the just obligations of the position held by the
416+11 offender.
417+12 "(28)(52) HOLDING ROOM. Either of the following:
418+13 "a. A room within a funeral establishment that
419+14 satisfies the requirements of a branch location as provided in
420+15 this chapter or board rule, for the retention of human remains
421+16 before disposition.
422+17 "b. A room within a crematory facility, designated
423+18 for the retention of human remains before and after cremation,
424+19 that is not accessible to the public.
425+20 "(53) HUMAN REMAINS. The body of a decedent in any
426+21 stage of decomposition, including cremated remains.
427+22 "(54) INTERMENT. The final disposition of human
428+23 remains by burial, burial at sea, entombment, or inurnment.
429+24 "(55) INTERMENT RIGHT. The right to inter human
430+25 remains in a particular interment space in a cemetery.
431+26 "(56) INTERMENT SPACE. A space intended for the
432+27 final disposition of human remains including, but not limited
433+Page 16 1 to, a grave space, mausoleum crypt, niche, and below-ground
434+2 crypt.
435+3 "(57) INURNMENT. The act of placing cremated remains
436+4 in a receptacle including, but not limited to, an urn and
437+5 depositing it in a niche.
438+6 "(58) LICENSEE. Any individual, firm, corporation,
439+7 partnership, joint venture, or limited liability company which
440+8 obtains a license in accordance with this chapter.
441+9 "(29)(59) MANAGING CREMATIONIST. A licensed funeral
442+10 director and cremationist who has full charge, control, and
443+11 supervision of all activities involving cremation at a funeral
444+12 establishment or crematory.
445+13 "(30)(60) MANAGING EMBALMER. A licensed embalmer who
446+14 has full charge, control, and supervision of all activities
447+15 involving the preparation room and embalming.
448+16 "(31)(61) MANAGING FUNERAL DIRECTOR. A licensed
449+17 funeral director who has full charge, control, and supervision
450+18 of all activities involving funeral directing for a funeral
451+19 establishment.
452+20 "(62) MAUSOLEUM. A chamber or structure used or
453+21 intended to be used for entombment.
454+22 "(63) MAUSOLEUM CRYPT. A chamber of a mausoleum of
455+23 sufficient size for entombment of human remains.
456+24 "(64) MEMORIAL. Any product, other than a mausoleum
457+25 or columbarium, used for identifying an interment space or for
458+26 commemoration of the life, deeds, or career of some decedent
459+27 including, but not limited to, a monument, marker, niche
460+Page 17 1 plate, urn garden plaque, crypt plate, cenotaph, marker bench,
461+2 and vase.
462+3 "(65) MEMORIAL RETAILER. Any person offering or
463+4 selling memorials at retail to the public.
464+5 "(66) MEMORIALIZATION. Any permanent system designed
465+6 to mark or record the names and other data pertaining to a
466+7 decedent.
467+8 "(32)(67) MORAL TURPITUDE. Any unlawful sexual or
468+9 violent act, or any act involving theft, theft of services,
469+10 theft by deception, extortion, receiving stolen property,
470+11 identity theft, forgery, fraud, tampering with records,
471+12 bribery, perjury, or any similar act in any jurisdiction.
472+13 "(33)(68) MORTUARY SCIENCE. The scientific,
473+14 professional, and practical aspects, with due consideration
474+15 given to accepted practices, covering the care, preparation
475+16 for burial, or transportation of dead human bodies, which
476+17 shall include the preservation and sanitation of the bodies
477+18 and restorative art and those aspects related to public
478+19 health, jurisprudence, and good business administration.
479+20 "(34)(69) MORTUARY SERVICE. A location with a
480+21 specific street address where embalming or cremation, or both,
481+22 is practiced for a licensed funeral establishment and where no
482+23 services or merchandise are sold directly or at retail to the
483+24 public. A mortuary service shall consist of and maintain all
484+25 of the following facilities:
485+26 "a. A preparation room equipped with sanitary
486+27 nonporous floor and walls, operating embalming equipment, and
487+Page 18 1 necessary drainage and ventilation and containing necessary
488+2 approved tables, instruments, hot and cold running water,
489+3 containers or receptacles for soiled linen or clothing, and
490+4 supplies for the preparation and embalming of dead human
491+5 bodies for burial, cremation, and transportation.
492+6 "b. At least one operating motor vehicle properly
493+7 licensed and equipped for transporting human remains in a
494+8 casket or urn.
495+9 "c. If engaged in the practice of cremation, the
496+10 establishment shall satisfy all requirements for a crematory
497+11 provided in this chapter.
498+12 "(70) NICHE. A space usually within a columbarium
499+13 used or intended to be used for inurnment of cremated remains.
500+14 "(35)(71) OPERATOR. A person, corporation, firm,
501+15 legal representative, managing funeral director, general
502+16 manager, or other organization owning or operating a funeral
503+17 establishment or cemetery.
504+18 "(72) OUTER BURIAL CONTAINER. A container that is
505+19 designed for placement in the grave space around the casket or
506+20 the urn including, but not limited to, containers commonly
507+21 known as burial vaults, grave boxes, and grave liners.
508+22 "(73) PERSON. Any individual, firm, corporation,
509+23 partnership, joint venture, limited liability company,
510+24 association, trustee, government or governmental subdivision,
511+25 agency, or other entity, or any combination thereof.
512+26 "(36)(74) PRACTICAL EMBALMER. Any person who has
513+27 been actively and continuously engaged or employed in the
514+Page 19 1 practice of embalming under the supervision of a licensed
515+2 embalmer for four consecutive years immediately preceding May
516+3 1, 1975, and has been issued a license as a practical embalmer
517+4 under the grandfather provisions of this chapter.
518+5 "(75) PREARRANGEMENT. The term applied to completing
519+6 the details for selection of merchandise or services on a
520+7 preneed basis, which may or may not include prefunding or
521+8 prepayment.
522+9 "(76) PREDEVELOPED. Designated areas or buildings
523+10 within a cemetery that have been mapped and planned for future
524+11 construction but are not yet completed.
525+12 "(77) PREDEVELOPED INTERMENT SPACE. An interment
526+13 space that is planned for future construction but is not yet
527+14 completed.
528+15 "(78) PREFUND. The term applied to completing the
529+16 financial details of a prearrangement, which include
530+17 prefunding or prepayment.
531+18 "(79) PRENEED. Any time prior to death.
532+19 "(80) PRENEED CONTRACT. A written contract to
533+20 purchase funeral merchandise, funeral services, cemetery
534+21 merchandise, or cemetery services from the seller on a preneed
535+22 basis.
536+23 "(81) PRENEED CONTRACT TRUST FUND. The funds
537+24 received pursuant to a preneed contract which are required by
538+25 law to be held in trust until the merchandise or services
539+26 purchased pursuant to the contract are delivered or provided
540+27 or until otherwise lawfully withdrawn.
541+Page 20 1 "(82) PRENEED SALES AGENT. A person who is in the
542+2 business of selling preneed contracts.
543+3 "(37)(83) PROCESSING or PULVERIZATION. The reduction
544+4 of identifiable bone fragments after the completion of the
545+5 cremation process to unidentifiable bone fragments or
546+6 granulated particles by manual or mechanical means.
547+7 "(84) PROVIDER. The person, who may or may not be
548+8 the seller, who actually provides merchandise and services
549+9 under the terms of a preneed contract.
550+10 "(85) PURCHASE PRICE. The amount paid by the
551+11 purchaser for merchandise and services purchased under a
552+12 preneed contract, exclusive of finance charges, sales tax,
553+13 charges relating to interment rights, arrangement conference
554+14 fees, or charges for credit life insurance.
555+15 "(86) PURCHASER. The person who purchases a preneed
556+16 contract either on his or her behalf or on behalf of a
557+17 third-party beneficiary.
558+18 "(87) RELIGIOUS INSTITUTION. An organization formed
559+19 primarily for religious purposes which has applied and
560+20 qualified for exemption from federal income tax as an exempt
561+21 organization under Section 501(c)(3) of the Internal Revenue
562+22 Code of 1986, as amended.
563+23 "(88) SCATTERING. The lawful dispersion of cremated
564+24 remains.
565+25 "(89) SELLER. Any person offering or selling
566+26 merchandise or services on a preneed basis including, but not
567+Page 21 1 limited to, funeral establishments, cemetery authorities,
568+2 crematory authorities, and memorial retailers.
569+3 "(90) SPECIAL CARE. Any care provided, or to be
570+4 provided, that is supplemental to, or in excess of, endowment
571+5 care, in accordance with the specific directions of any donor
572+6 of funds for those purposes.
573+7 "(91) SUCCESSOR-IN-INTEREST. A person who lawfully
574+8 follows another in ownership or control of property or rights.
575+9 "(38)(92) TEMPORARY CONTAINER. A receptacle for
576+10 cremated remains, usually composed of cardboard, plastic, or
577+11 similar material, that can be closed in a manner that prevents
578+12 the leakage or spillage of the cremated remains or the
579+13 entrance of foreign material, and is a single container of
580+14 sufficient size to hold the cremated remains until an urn is
581+15 acquired or the cremated remains are scattered or buried.
582+16 "(93) THIRD-PARTY SELLER. Any person, who is not a
583+17 funeral establishment or a cemetery authority, engaged in the
584+18 sale of preneed funeral merchandise or cemetery merchandise.
585+19 "(94) TRUSTEE. Any person, state or national bank,
586+20 trust company, or federally insured savings and loan
587+21 association lawfully appointed as fiduciary over funds
588+22 deposited by one or more purchasers of a preneed contract or
589+23 deposited pursuant to an endowment care trust fund. The term
590+24 does not refer to a board of trustees.
591+25 "(39)(95) URN. A receptacle designed to encase
592+26 cremated remains.
593+Page 22 1 "(b) Nothing in this chapter shall require a funeral
594+2 director or funeral establishment to have or provide a chapel
595+3 or to restrict the conduct of funeral services from a church
596+4 or chapel.
597+5 "§34-13-20.
598+6 "(a) There is established the Alabama Board of
599+7 Funeral Service, consisting of nine members, each of whom
600+8 shall be citizens of the United States and residents of the
601+9 State of Alabama.
602+10 "(b) The appointing authorities shall coordinate
603+11 their appointments to assure board membership is inclusive and
604+12 reflects the racial, gender, geographic, urban/rural, and
605+13 economic diversity of the state.
606+14 "(c) Commencing on January 1, 2019, as the terms of
607+15 the members serving on the board on August 1, 2017, expire,
608+16 the membership of the board shall be reconstituted to consist
609+17 of seven professional members and two consumer members.
610+18 "(1) Each professional member of the board shall be
611+19 a citizen of the United States, a resident of Alabama, and
612+20 licensed and in good standing with the board as an embalmer or
613+21 funeral director at the time of appointment and during the
614+22 entire term of office. Professional members of the board shall
615+23 be appointed by the Governor pursuant to subsection (e). As
616+24 the terms of the members serving on the board on the effective
617+25 date of the act adding this sentence expire, the professional
618+26 membership of the board shall be appointed to reflect the
619+27 following:
620+Page 23 1 "a. Four Three of the professional members of the
594621 2 board shall hold a current license from the board to practice
595-3 funeral directing in the state, shall have been actively
596-4 engaged in funeral directing in the state for the last 10
597-5 consecutive years immediately preceding appointment, and shall
598-6 be the operator of a funeral establishment in this state at
599-7 the time of appointment to the board. Two of these four
600-8 professional members shall also hold a current certificate of
601-9 authority to sell preneed services and merchandise.
602-10 "(2) Each consumer member of the board shall
603-11 represent the public in general and shall have been a citizen
604-12 of the United States and a resident of Alabama for the last 10
605-13 consecutive years immediately preceding appointment and during
606-14 the entire term of office. A consumer member of the board may
607-15 not have held, nor currently hold, a license or certification
608-16 issued by the board, be employed at any time by, or
609-17 professionally or financially associated with, the holder of a
610-18 license or certificate issued by the board, or be related
611-19 within the third degree of consanguinity or affinity to the
612-20 holder of a license or certificate issued by the board. One
613-21 consumer member of the board shall be appointed by the
614-22 Lieutenant Governor and one consumer member shall be appointed
615-23 by the Speaker of the House of Representatives pursuant to a
616-24 procedure adopted by rule of the board.
617-25 "(d) Commencing in October of 2018, and each October
618-26 thereafter of a year where at least one professional member
619-27 term on the board has expired, or is vacant for any reason,
620-Page 23 1 all licensed funeral directors and licensed embalmers shall
621-2 meet in Montgomery, at a time and place fixed by the board,
622-3 for the purpose of nominating and submitting the names of
623-4 three licensed persons for each position on the board to the
624-5 Governor. The Governor shall promptly appoint one of the three
625-6 persons so nominated to serve as a professional member of the
626-7 board.
627-8 "(e)(1) Professional and consumer members of the
628-9 board shall serve staggered terms of four years each to
629-10 provide continuity of service on the board. If an appointment
630-11 is not made before the expiration of a term, the board member
631-12 then serving may continue to serve until a successor has been
632-13 appointed. A board member may not serve more than two full
633-14 consecutive terms on the board.
634-15 "(2) A board member who is appointed to fill a
635-16 vacancy which occurs before the expiration of the term of the
636-17 vacating member shall serve the remaining portion of the term
637-18 to which the former member was appointed. If a member is
638-19 appointed to fill an unexpired term of less than two years,
639-20 the time may not be counted toward the maximum eight years of
640-21 service.
641-22 "(3) Not more than one professional member of the
642-23 board may reside in the same district as created by Section
643-24 34-13-21.
644-25 "(4) At each meeting where nominations are made for
645-26 the professional members of the board, only one licensed
646-Page 24 1 funeral director or licensed embalmer employed by the same
647-2 funeral establishment may vote.
648-3 "(f)(1) In accordance with applicable law, in
649-4 addition to a board member resigning from the board in
650-5 writing, a board member may be removed from the board for any
651-6 of the following grounds:
652-7 "a. The refusal or inability to perform board duties
653-8 in an efficient, responsible, or professional manner.
654-9 "b. The misuse of his or her position on the board
655-10 to obtain financial gain or seek personal advantage for
656-11 himself, herself, or another person.
657-12 "c. A final adjudication or determination of guilt
658-13 by any lawful authority of the board member or sanction of the
659-14 board member for the violation of any law the board determines
660-15 is substantially related to any practice governed by this
661-16 chapter.
662-17 "d. The revocation or suspension of the license of a
663-18 professional member of the board.
664-19 "(2) Any board member who fails to qualify after
665-20 appointment shall automatically become ineligible to serve as
666-21 a member of the board and a new member, properly qualified,
667-22 shall be appointed in the same manner as the original
668-23 appointment and shall serve the remainder of the term of the
669-24 vacating board member.
670-25 "(3) If a consumer board member fails to attend two
671-26 or more meetings within a year, without a valid excuse as
672-27 determined by the board, he or she shall be removed from the
673-Page 25 1 board. A new consumer board member shall be appointed in the
674-2 same manner as the original appointment and shall serve the
675-3 remainder of the term.
676-4 Section 2. Sections 27-17A-1, 27-17A-3, and 27-17A-4
677-5 of the Code of Alabama 1975, are amended and renumbered as
678-6 Division 1 of Article 5 of Chapter 13 of Title 34, Code of
679-7 Alabama 1975, to read as follows:
680-8 "ARTICLE 5. Alabama Preneed Funeral and Cemetery Act
681-9 of 2022.
682-10 "Division 1. General Provisions.
683-11 "§27-17A-1. §34-13-170.
684-12 "(a) This chapter article shall be known and may be
685-13 cited as the Alabama Preneed Funeral and Cemetery Act of 2022.
686-14 "(b)(1) The Alabama Board of Funeral Service
687-15 succeeds to and is vested with the powers, duties, and
688-16 functions of the Department of Insurance relating to the
689-17 regulation of endowment care, preneed sales contracts, and the
690-18 licensing of preneed sales agents.
691-19 "(2) All funds and records of the Department of
692-20 Insurance relating to the regulation of preneed sales
693-21 contracts, endowment care, and the licensing of preneed sales
694-22 agents are transferred to the board.
695-23 "(3) The status of any person properly licensed by
696-24 the Department of Insurance under the former Chapter 17A of
697-25 Title 27, on the effective date of the act adding this
698-26 subdivision, shall continue under the board.
699-Page 26 1 "(4) The administrative rules of the Department of
700-2 Insurance existing on the effective date of the act adding
701-3 this subdivision shall remain in effect as administrative
702-4 rules of the board until added, amended, or repealed by the
703-5 board.
704-6 "(5) The existence and functioning of the Alabama
705-7 Preneed Funeral and Cemetery Act, created and functioning
706-8 pursuant to Sections 27-17A-1 to 27-17A-57, inclusive, is
707-9 continued as the Alabama Preneed Funeral and Cemetery Act of
708-10 2022, under this article. All rights, duties, and obligations
709-11 existing in the name of the Department of Insurance, relating
710-12 to endowment care, preneed sales contracts, and preneed sales
711-13 agent licenses, shall continue under the board. Any reference
712-14 to the Department of Insurance in any existing law, contract,
713-15 or other instrument relating to endowment care, preneed sales
714-16 contracts, and preneed sales agent licenses, shall be deemed a
715-17 reference to the board.
716-18 "(6) The transfer of the regulation of preneed
717-19 contracts and the licensing of preneed sales agents from the
718-20 Department of Insurance to the board shall not affect the
719-21 rights of any person held before the effective date of the act
720-22 adding this subdivision, as those rights relate to any preneed
721-23 trust funds, endowment care trust funds, or any other funds
722-24 held in trust pursuant to the Alabama Preneed Funeral and
723-25 Cemetery Act.
724-26 "§27-17A-3. §34-13-171.
725-Page 27 1 "(a) Nothing in this chapter shall be construed to
726-2 prohibit the funding of preneed contracts with multiple
727-3 insurance or annuity contracts. Life insurance and annuity
728-4 contracts used to fund preneed contracts shall conform with
729-5 the provisions of this title Title 27 as they relate to life
730-6 insurance and annuities and shall cover not less than the
731-7 initial retail price of the preneed contract.
732-8 "(b) The initial premium payment for a life
733-9 insurance policy or annuity contract shall be made payable to
734-10 the issuing insurance company and the preneed seller shall
735-11 remit the payment to the insurance company within 10 business
736-12 days after the insurance application is signed by the parties.
737-13 If a preneed contract provides for installment payments, each
738-14 premium payment shall be made payable to the insurance company
739-15 and, if collected by the preneed seller, shall be remitted to
740-16 the insurance company within 10 business days after receipt by
741-17 the preneed seller.
742-18 "(c) Nothing in this chapter shall prohibit a
743-19 seller, or any other person, from receiving commissions earned
744-20 and payable in regard to funding preneed contracts with life
745-21 insurance or annuity contracts, provided the seller or other
746-22 person holds a valid insurance producer license in this state
747-23 and is appointed by the insurance company paying the
748-24 commission.
749-25 "(d) A preneed seller may be identified as the
750-26 beneficiary or assignee of the death benefit proceeds of a
751-27 life insurance policy or annuity contract sold as a future
752-Page 28 1 funding mechanism for a preneed contract, but may not be the
753-2 owner of the policy or annuity contract or exercise any
754-3 ownership rights in the policy or annuity. If the preneed
755-4 contract is cancelled before or after the death of the funeral
756-5 beneficiary, the preneed seller shall cancel and relinquish
757-6 any assignment of benefits or beneficiary status under the
758-7 policy or annuity contract, and deliver the policy or
759-8 contract, if in the custody of the preneed seller, to the
760-9 policy owner or his or her legal representative.
761-10 §27-17A-4. §34-13-172.
762-11 "Nothing in this chapter shall be construed to
763-12 prohibit cemetery authorities from selling funeral
764-13 merchandise, funeral establishments from selling cemetery
765-14 merchandise, or third-party sellers from selling either
766-15 funeral merchandise or cemetery merchandise, or both.
767-16 Provided, the required amount of the purchase price to be
768-17 placed into trust shall be governed by the appropriate section
769-18 of this chapter."
770-19 Section 3. Sections 27-17A-10, 27-17A-11,
771-20 27-17A-11.1, 27-17A-12, 27-17A-13, 27-17A-14, 27-17A-15,
772-21 27-17A-16, 27-17A-17, 27-17A-18, 27-17A-19, 27-17A-20,
773-22 27-17A-21, 27-17A-22, 27-17A-23, 27-17A-24, and 27-17A-25 of
774-23 the Code of Alabama 1975, are amended and renumbered as
775-24 Division 2 of Article 5 of Chapter 13 of Title 34, Code of
776-25 Alabama 1975, to read as follows:
777-26 "Division 2. Certificate of Authority.
778-27 "§27-17A-10. §34-13-190.
779-Page 29 1 "(a) No person may sell a preneed contract without
780-2 first having a valid certificate of authority.
781-3 "(b)(1) No person may receive any funds for payment
782-4 on a preneed contract who does not hold a valid certificate of
783-5 authority.
784-6 "(2) Any preneed transaction in which a buyer pays
785-7 to the seller before need, in whole or in part, a purchase
786-8 price for funeral or cemetery merchandise and services, and in
787-9 which the seller is not obligated to deliver the contracted
788-10 for merchandise or to perform the services until need, in
789-11 whole or in part, shall be evidenced by a written preneed
790-12 contract satisfying the requirements of this chapter and
791-13 signed by the seller and the purchaser. No person may receive
792-14 or accept any form of consideration in such a transaction
793-15 without a fully signed written preneed contract. A transaction
794-16 not evidenced by a signed written preneed contract shall be
795-17 voidable at the election of the buyer and, if such election is
796-18 made, the seller shall refund to the buyer the entire amount
797-19 paid by the buyer together with interest thereon at the legal
798-20 rate within 30 days after notice to the seller.
799-21 "(3) The provisions of subdivision (1) do not apply
800-22 to the purchase of a life insurance policy or annuity, the
801-23 benefits of which are assigned to a funeral home and/or or
802-24 cemetery authority, or the benefits of which are to be paid to
803-25 a funeral home and/or or cemetery authority named as
804-26 beneficiary of the policy or annuity, as long as the purchaser
805-27 and funeral home and/or or cemetery authority acknowledge in
806-Page 30 1 writing that no preneed contract is entered as a result of the
807-2 purchase or assignment of the life insurance policy or annuity
808-3 at the time the policy or annuity is purchased. Benefits from
809-4 a life insurance policy or annuity issued under this
810-5 subdivision shall only be paid to a funeral home and/or or
811-6 cemetery authority which provides funeral or cemetery
812-7 merchandise and services at the death of the insured whether
813-8 or not such funeral home and/or or cemetery has been named as
814-9 an assignee or the beneficiary of the policy or annuity. If
815-10 the amount of the policy or annuity proceeds shall exceed the
816-11 actual funeral costs at the time of need, such the excess
817-12 amount must shall be paid to a designated beneficiary, other
818-13 than a funeral home and/or or cemetery authority, or to the
819-14 estate of the insured or annuitant.
820-15 "(4) The provisions of subdivision Subdivision (1)
821-16 do does not apply to any legal reserve insurance company or to
822-17 any trust company or to any national or state bank or savings
823-18 and loan association having trust powers which company, bank,
824-19 or association receives any money in trust pursuant to the
825-20 sale of a preneed contract.
826-21 "(c)(1) No person may obtain a certificate of
827-22 authority under this article chapter for the preneed sale of
828-23 funeral services or cemetery services unless the person or its
829-24 agent, in the case of a corporate entity, holds a license as a
830-25 funeral director or a funeral establishment, or is a cemetery
831-26 authority. and qualifies as an applicant for a certificate of
832-Page 31 1 authority pursuant to the following standards and
833-2 qualifications:
834-3 "a. The applicant shall be at least the legal age of
835-4 majority in this state.
836-5 "b. The applicant shall be in good standing with the
837-6 board.
838-7 "c. The applicant may not have any felony or
839-8 misdemeanor convictions that relate to any activity regulated
840-9 by this chapter or a crime involving moral turpitude, as
841-10 defined by this chapter.
842-11 "d. The applicant shall be of good moral character
622+3 embalming in the state, shall have been actively practicing
623+4 embalming in the state for the last 10 consecutive years
624+5 immediately preceding appointment, and shall be engaged in the
625+6 practice of embalming at the time of appointment to the board.
626+7 "b. Three Four of the professional members of the
627+8 board shall hold a current license from the board to practice
628+9 funeral directing in the state, shall have been actively
629+10 engaged in funeral directing in the state for the last 10
630+11 consecutive years immediately preceding appointment, and shall
631+12 be the operator of a funeral establishment in this state at
632+13 the time of appointment to the board. Two of these four
633+14 professional members shall also hold a current certificate of
634+15 authority to sell preneed services and merchandise.
635+16 "(2) Each consumer member of the board shall
636+17 represent the public in general and shall have been a citizen
637+18 of the United States and a resident of Alabama for the last 10
638+19 consecutive years immediately preceding appointment and during
639+20 the entire term of office. A consumer member of the board may
640+21 not have held, nor currently hold, a license or certification
641+22 issued by the board, be employed at any time by, or
642+23 professionally or financially associated with, the holder of a
643+24 license or certificate issued by the board, or be related
644+25 within the third degree of consanguinity or affinity to the
645+26 holder of a license or certificate issued by the board. One
646+27 consumer member of the board shall be appointed by the
647+Page 24 1 Lieutenant Governor and one consumer member shall be appointed
648+2 by the Speaker of the House of Representatives pursuant to a
649+3 procedure adopted by rule of the board.
650+4 "(d) Commencing in October of 2018, and each October
651+5 thereafter of a year where at least one professional member
652+6 term on the board has expired, or is vacant for any reason,
653+7 all licensed funeral directors and licensed embalmers shall
654+8 meet in Montgomery, at a time and place fixed by the board,
655+9 for the purpose of nominating and submitting the names of
656+10 three licensed persons for each position on the board to the
657+11 Governor. The Governor shall promptly appoint one of the three
658+12 persons so nominated to serve as a professional member of the
659+13 board.
660+14 "(e)(1) Professional and consumer members of the
661+15 board shall serve staggered terms of four years each to
662+16 provide continuity of service on the board. If an appointment
663+17 is not made before the expiration of a term, the board member
664+18 then serving may continue to serve until a successor has been
665+19 appointed. A board member may not serve more than two full
666+20 consecutive terms on the board.
667+21 "(2) A board member who is appointed to fill a
668+22 vacancy which occurs before the expiration of the term of the
669+23 vacating member shall serve the remaining portion of the term
670+24 to which the former member was appointed. If a member is
671+25 appointed to fill an unexpired term of less than two years,
672+26 the time may not be counted toward the maximum eight years of
673+27 service.
674+Page 25 1 "(3) Not more than one professional member of the
675+2 board may reside in the same district as created by Section
676+3 34-13-21.
677+4 "(4) At each meeting where nominations are made for
678+5 the professional members of the board, only one licensed
679+6 funeral director or licensed embalmer employed by the same
680+7 funeral establishment may vote.
681+8 "(f)(1) In accordance with applicable law, in
682+9 addition to a board member resigning from the board in
683+10 writing, a board member may be removed from the board for any
684+11 of the following grounds:
685+12 "a. The refusal or inability to perform board duties
686+13 in an efficient, responsible, or professional manner.
687+14 "b. The misuse of his or her position on the board
688+15 to obtain financial gain or seek personal advantage for
689+16 himself, herself, or another person.
690+17 "c. A final adjudication or determination of guilt
691+18 by any lawful authority of the board member or sanction of the
692+19 board member for the violation of any law the board determines
693+20 is substantially related to any practice governed by this
694+21 chapter.
695+22 "d. The revocation or suspension of the license of a
696+23 professional member of the board.
697+24 "(2) Any board member who fails to qualify after
698+25 appointment shall automatically become ineligible to serve as
699+26 a member of the board and a new member, properly qualified,
700+27 shall be appointed in the same manner as the original
701+Page 26 1 appointment and shall serve the remainder of the term of the
702+2 vacating board member.
703+3 "(3) If a consumer board member fails to attend two
704+4 or more meetings within a year, without a valid excuse as
705+5 determined by the board, he or she shall be removed from the
706+6 board. A new consumer board member shall be appointed in the
707+7 same manner as the original appointment and shall serve the
708+8 remainder of the term.
709+9 "§34-13-111.
710+10 "(a) No funeral establishment or branch thereof for
711+11 the preparation, disposition, and care of dead human bodies
712+12 shall be opened or maintained unless licensed by the board. No
713+13 funeral establishment or branch shall be moved without
714+14 obtaining a new funeral establishment license from the board.
715+15 "(b) Every funeral service, memorial service, or
716+16 committal service, or part thereof, that is conducted in
717+17 Alabama, for hire or for profit, shall be in the actual charge
718+18 and shall be under the direct supervision of a funeral
719+19 director who is licensed by the board, unless otherwise
720+20 provided for in this chapter or by rule of the board.
721+21 "(c) The board shall set a fee, not exceeding one
722+22 hundred fifty dollars ($150), that shall be in addition to the
723+23 license fee for the first inspection of any funeral
724+24 establishment seeking a license under Section 34-13-72 made
725+25 for the purpose of determining whether the funeral
726+26 establishment has fulfilled the requirements for licensure
727+27 pursuant to this chapter. The board shall set a fee, not
728+Page 27 1 exceeding one hundred fifty dollars ($150), for each
729+2 reinspection necessitated by failure of any funeral
730+3 establishment to pass the first inspection. The board, or a
731+4 representative of the board, shall annually conduct at least
732+5 one unannounced inspection of each funeral establishment and
733+6 branch, with an inspection fee of not more than one hundred
734+7 dollars ($100). The inspection fee shall be submitted to the
735+8 board within 45 days after the inspection. Any funeral
736+9 establishment that does not submit the inspection fee within
737+10 45 days shall be charged a late penalty fee, as established by
738+11 the board. A funeral establishment, or branch thereof, that is
739+12 used for the preparation, disposition, and care of dead human
740+13 bodies shall meet and conform to this chapter and to such
741+14 other lawful standards and requirements as may be determined
742+15 by rule of the board in furtherance of this chapter; and, for
743+16 failure to do so, the board may revoke the funeral
744+17 establishment license in accordance with the procedure set
745+18 forth in this chapter.
746+19 "(d) Applications for transfer of a license to
747+20 another location in the same county shall be made upon a form
748+21 furnished by the board and shall be accompanied by a fee of
749+22 not more than seventy-five dollars ($75).
750+23 "(e) Any change in ownership of a funeral
751+24 establishment shall be immediately reported to the board on a
752+25 form provided by the board. The new owner of the establishment
753+26 shall comply with Section 34-13-112 and Section 34-13-113 and
754+27 shall provide to the board a signed copy of the asset purchase
755+Page 28 1 agreement with dollar amounts redacted. The fee for a change
756+2 of ownership application is two hundred fifty dollars ($250).
757+3 "(f)(1) Each funeral establishment, on a date
758+4 prescribed by rule of the board, shall pay a disposition fee
759+5 not exceeding fifty dollars ($50) for each final disposition
760+6 arranged or performed by the funeral establishment. The
761+7 disposition fee, which applies to all final dispositions and
762+8 may be collected directly from the consumer, shall be
763+9 submitted to the board quarterly and deposited into the
764+10 Alabama State Funeral Service Fund.
765+11 "(2) Failure to remit a disposition fee as required
766+12 by this subsection shall result in disciplinary action by the
767+13 board pursuant to this chapter.
768+14 Section 2. Sections 27-17A-1, 27-17A-3, and 27-17A-4
769+15 of the Code of Alabama 1975, are amended and renumbered as
770+16 Division 1 of Article 5 of Chapter 13 of Title 34, Code of
771+17 Alabama 1975, to read as follows:
772+18 "ARTICLE 5. Alabama Preneed Funeral and Cemetery Act
773+19 of 2022.
774+20 "Division 1. General Provisions.
775+21 "§27-17A-1. §34-13-170.
776+22 "(a) This chapter article shall be known and may be
777+23 cited as the Alabama Preneed Funeral and Cemetery Act of 2022.
778+24 "(b)(1) The Alabama Board of Funeral Service
779+25 succeeds to and is vested with the powers, duties, and
780+26 functions of the Department of Insurance relating to the
781+Page 29 1 regulation of endowment care, preneed sales contracts, and the
782+2 licensing of preneed sales agents.
783+3 "(2) All funds and records of the Department of
784+4 Insurance relating to the regulation of preneed sales
785+5 contracts, endowment care, and the licensing of preneed sales
786+6 agents are transferred to the board.
787+7 "(3) The status of any person properly licensed by
788+8 the Department of Insurance under the former Chapter 17A of
789+9 Title 27, on the effective date of the act adding this
790+10 subdivision, shall continue under the board.
791+11 "(4) The administrative rules of the Department of
792+12 Insurance existing on the effective date of the act adding
793+13 this subdivision shall remain in effect as administrative
794+14 rules of the board until added, amended, or repealed by the
795+15 board.
796+16 "(5) The existence and functioning of the Alabama
797+17 Preneed Funeral and Cemetery Act, created and functioning
798+18 pursuant to Sections 27-17A-1 to 27-17A-57, inclusive, is
799+19 continued as the Alabama Preneed Funeral and Cemetery Act of
800+20 2022, under this article. All rights, duties, and obligations
801+21 existing in the name of the Department of Insurance, relating
802+22 to endowment care, preneed sales contracts, and preneed sales
803+23 agent licenses, shall continue under the board. Any reference
804+24 to the Department of Insurance in any existing law, contract,
805+25 or other instrument relating to endowment care, preneed sales
806+26 contracts, and preneed sales agent licenses, shall be deemed a
807+27 reference to the board.
808+Page 30 1 "(6) The transfer of the regulation of preneed
809+2 contracts and the licensing of preneed sales agents from the
810+3 Department of Insurance to the board shall not affect the
811+4 rights of any person held before the effective date of the act
812+5 adding this subdivision, as those rights relate to any preneed
813+6 trust funds, endowment care trust funds, or any other funds
814+7 held in trust pursuant to the Alabama Preneed Funeral and
815+8 Cemetery Act.
816+9 "§27-17A-3.§34-13-171.
817+10 "(a) Nothing in this chapter shall be construed to
818+11 prohibit the funding of preneed contracts with multiple
819+12 insurance or annuity contracts, provided the combined face
820+13 amounts of the funding life insurance policies and the
821+14 annuity's ultimate death benefits are not less than the
822+15 initial purchase price of the preneed contract. This
823+16 subsection does not prohibit the use of life insurance and
824+17 annuity products which have graded or limited death benefits
825+18 features. Life insurance and annuity contracts used to fund
826+19 preneed contracts shall conform with the provisions of this
827+20 title Title 27 as they relate to life insurance and annuities
828+21 and shall cover not less than the initial retail price of the
829+22 preneed contract.
830+23 "(b) The initial premium payment for a life
831+24 insurance policy or annuity contract shall be made payable to
832+25 the issuing insurance company and the preneed seller shall
833+26 remit the payment to the insurance company within 10 business
834+27 days after the insurance application is signed by the parties.
835+Page 31 1 If a preneed contract provides for installment payments, each
836+2 premium payment shall be made payable to the insurance company
837+3 and, if collected by the preneed seller, shall be remitted to
838+4 the insurance company within 10 business days after receipt by
839+5 the preneed seller.
840+6 "(c) Nothing in this chapter shall prohibit a
841+7 seller, or any other person, from receiving commissions earned
842+8 and payable in regard to funding preneed contracts with life
843+9 insurance or annuity contracts, provided the seller or other
844+10 person holds a valid insurance producer license in this state
845+11 and is appointed by the insurance company paying the
846+12 commission.
847+13 "(d) A preneed seller may be identified as the
848+14 beneficiary or assignee of the death benefit proceeds of a
849+15 life insurance policy or annuity contract sold as a future
850+16 funding mechanism for a preneed contract, but may not be the
851+17 owner of the policy or annuity contract or exercise any
852+18 ownership rights in the policy or annuity. If the preneed
853+19 contract is cancelled before or after the death of the funeral
854+20 beneficiary, the preneed seller shall cancel and relinquish
855+21 any assignment of benefits or beneficiary status under the
856+22 policy or annuity contract, and deliver the policy or
857+23 contract, if in the custody of the preneed seller, to the
858+24 policy owner or his or her legal representative.
859+25 §27-17A-4.§34-13-172.
860+26 "Nothing in this chapter shall be construed to
861+27 prohibit cemetery authorities from selling funeral
862+Page 32 1 merchandise, funeral establishments from selling cemetery
863+2 merchandise, or third-party sellers from selling either
864+3 funeral merchandise or cemetery merchandise, or both.
865+4 Provided, the required amount of the purchase price to be
866+5 placed into trust shall be governed by the appropriate section
867+6 of this chapter."
868+7 Section 3. Sections 27-17A-10, 27-17A-11,
869+8 27-17A-11.1, 27-17A-12, 27-17A-13, 27-17A-14, 27-17A-15,
870+9 27-17A-16, 27-17A-17, 27-17A-18, 27-17A-19, 27-17A-20,
871+10 27-17A-21, 27-17A-22, 27-17A-23, 27-17A-24, and 27-17A-25 of
872+11 the Code of Alabama 1975, are amended and renumbered as
873+12 Division 2 of Article 5 of Chapter 13 of Title 34, Code of
874+13 Alabama 1975, to read as follows:
875+14 "Division 2. Certificate of Authority.
876+15 "§27-17A-10.§34-13-190.
877+16 "(a) No person may sell a preneed contract without
878+17 first having a valid certificate of authority.
879+18 "(b)(1) No person may receive any funds for payment
880+19 on a preneed contract who does not hold a valid certificate of
881+20 authority.
882+21 "(2) Any preneed transaction in which a buyer pays
883+22 to the seller before need, in whole or in part, a purchase
884+23 price for funeral or cemetery merchandise and services, and in
885+24 which the seller is not obligated to deliver the contracted
886+25 for merchandise or to perform the services until need, in
887+26 whole or in part, shall be evidenced by a written preneed
888+27 contract satisfying the requirements of this chapter and
889+Page 33 1 signed by the seller and the purchaser. No person may receive
890+2 or accept any form of consideration in such a transaction
891+3 without a fully signed written preneed contract. A transaction
892+4 not evidenced by a signed written preneed contract shall be
893+5 voidable at the election of the buyer and, if such election is
894+6 made, the seller shall refund to the buyer the entire amount
895+7 paid by the buyer together with interest thereon at the legal
896+8 rate within 30 days after notice to the seller.
897+9 "(3) The provisions of subdivision (1) do not apply
898+10 to the purchase of a life insurance policy or annuity, the
899+11 benefits of which are assigned to a funeral home and/or or
900+12 cemetery authority, or the benefits of which are to be paid to
901+13 a funeral home and/or or cemetery authority named as
902+14 beneficiary of the policy or annuity, as long as the purchaser
903+15 and funeral home and/or or cemetery authority acknowledge in
904+16 writing that no preneed contract is entered as a result of the
905+17 purchase or assignment of the life insurance policy or annuity
906+18 at the time the policy or annuity is purchased. Benefits from
907+19 a life insurance policy or annuity issued under this
908+20 subdivision shall only be paid to a funeral home and/or or
909+21 cemetery authority which provides funeral or cemetery
910+22 merchandise and services at the death of the insured whether
911+23 or not such funeral home and/or or cemetery has been named as
912+24 an assignee or the beneficiary of the policy or annuity. If no
913+25 preneed contract was entered or executed, and in the event the
914+26 amount of the policy or annuity proceeds shall exceed the
915+27 actual funeral costs at the time of need, such the excess
916+Page 34 1 amount must shall be paid to a designated beneficiary, other
917+2 than a funeral home and/or or cemetery authority, or to the
918+3 estate of the insured or annuitant.
919+4 "(4) The provisions of subdivision Subdivision (1)
920+5 do does not apply to any legal reserve insurance company or to
921+6 any trust company or to any national or state bank or savings
922+7 and loan association having trust powers which company, bank,
923+8 or association receives any money in trust pursuant to the
924+9 sale of a preneed contract.
925+10 "(c)(1) No person may obtain a certificate of
926+11 authority under this article chapter for the preneed sale of
927+12 funeral services or cemetery services unless the person or its
928+13 agent, in the case of a corporate entity, holds a license as a
929+14 funeral director or a funeral establishment, or is a cemetery
930+15 authority. and qualifies as an applicant for a certificate of
931+16 authority pursuant to the following standards and
932+17 qualifications:
933+18 "a. The applicant shall be at least 18 years of age.
934+19 "b. The applicant shall be in good standing with the
935+20 board.
936+21 "c. The applicant may not have any felony or
937+22 misdemeanor convictions that relate to any activity regulated
938+23 by this chapter or a crime involving moral turpitude, as
939+24 defined by this chapter.
940+25 "d. The applicant shall be of good moral character
941+26 and submit to a criminal history background check pursuant to
942+27 subdivision (2).
943+Page 35 1 "(2) An applicant for a certificate of authority
944+2 shall submit to the board, on a form sworn to by the
945+3 applicant, his or her name, date of birth, Social Security
946+4 number, and two complete sets of fingerprints for completion
947+5 of a criminal history background check. The board shall submit
948+6 the fingerprints to the Alabama State Law Enforcement Agency
949+7 for a state criminal history background check. The
950+8 fingerprints shall be forwarded by the agency to the Federal
951+9 Bureau of Investigation for a national criminal history
952+10 background check. Costs associated with conducting a criminal
953+11 history background check shall be paid by the applicant. The
954+12 board shall keep information received pursuant to this
955+13 subdivision confidential, except that information received and
956+14 relied upon in denying the issuance of a certificate of
957+15 authority may be disclosed if necessary to support the denial.
958+16 All character information, including the information obtained
959+17 through the criminal history background checks, shall be
960+18 considered in licensure decisions to the extent permissible by
961+19 all applicable laws.
962+20 "(d) The provisions of this This section do does not
963+21 apply to a cemetery authority owned or operated by a
964+22 governmental agency or a religious institution or to those
965+23 cemeteries that do not charge fees or sell plots, interment
966+24 rights, or any related cemetery merchandise.
967+25 "§27-17A-11.§34-13-191.
968+26 "(a) An application to the commissioner board for a
969+27 certificate of authority shall be accompanied by the statement
970+Page 36 1 and other matters described in this section in the form
971+2 prescribed by the commissioner board. Annually thereafter,
972+3 within six months after the end of its fiscal period, or
973+4 within an extension of time therefor, as the commissioner
974+5 board for good cause may grant, the person authorized to
975+6 engage in the sale of preneed contracts shall file with the
976+7 commissioner board a full and true statement of his or her
977+8 financial condition, transactions, and affairs, prepared on a
978+9 basis as adopted by a rule of the commissioner board, as of
979+10 the preceding fiscal period or at such other time or times as
980+11 the commissioner board may provide by rule, together with
981+12 information and data which may be required by the commissioner
982+13 board. A statement filed with the board pursuant to this
983+14 subsection is not considered a public record unless the
984+15 reports the statement covers are presented at a hearing of the
985+16 board.
986+17 "(b) The statement shall include all of the
987+18 following:
988+19 "(1) The types of preneed contracts proposed to be
989+20 written and the type of funding vehicle vehicles to be used.
990+21 "(2) The name and address of the place of business
991+22 of the person offering to write preneed contracts.
992+23 "(3)a. Evidence that the person offering the
993+24 statement has the following qualifications:
994+25 "a.1. Has the ability to discharge his or her
995+26 preneed liabilities as they become due in the normal course of
996+27 business and has sufficient funds available during the
997+Page 37 1 calendar year to perform his or her obligations under the
998+2 contract.
999+3 "b.2. Has complied with the trust requirements for
1000+4 the funds received under contracts issued by himself or
1001+5 herself as hereinafter described.
1002+6 "c.3. Has disbursed interest, dividends, or
1003+7 accretions earned by trust funds, in accordance with this
1004+8 article chapter and rules promulgated adopted hereunder.
1005+9 "d.4. Has complied with this chapter and any rules
1006+10 of the commissioner board.
1007+11 "5. The applicant shall be of good moral character
8431008 12 and submit to a criminal history background check pursuant to
844-13 subdivision (2).
845-14 "(2) An applicant for a certificate of authority
1009+13 paragraph b.
1010+14 "b. An applicant for a certificate of authority
8461011 15 shall submit to the board, on a form sworn to by the
8471012 16 applicant, his or her name, date of birth, Social Security
8481013 17 number, and two complete sets of fingerprints for completion
8491014 18 of a criminal history background check. The board shall submit
8501015 19 the fingerprints to the Alabama State Law Enforcement Agency
8511016 20 for a state criminal history background check. The
8521017 21 fingerprints shall be forwarded by the agency to the Federal
8531018 22 Bureau of Investigation for a national criminal history
8541019 23 background check. Costs associated with conducting a criminal
8551020 24 history background check shall be paid by the applicant. The
8561021 25 board shall keep information received pursuant to this
8571022 26 subdivision confidential, except that information received and
8581023 27 relied upon in denying the issuance of a certificate of
859-Page 32 1 authority may be disclosed if necessary to support the denial.
1024+Page 38 1 authority may be disclosed if necessary to support the denial.
8601025 2 All character information, including the information obtained
8611026 3 through the criminal history background checks, shall be
8621027 4 considered in licensure decisions to the extent permissible by
8631028 5 all applicable laws.
864-6 "(d) The provisions of this This section do does not
865-7 apply to a cemetery authority owned or operated by a
866-8 governmental agency or a religious institution or to those
867-9 cemeteries that do not charge fees or sell plots, interment
868-10 rights, or any related cemetery merchandise.
869-11 "§27-17A-11. §34-13-191.
870-12 "(a) An application to the commissioner board for a
871-13 certificate of authority shall be accompanied by the statement
872-14 and other matters described in this section in the form
873-15 prescribed by the commissioner board. Annually thereafter,
874-16 within six months after the end of its fiscal period, or
875-17 within an extension of time therefor, as the commissioner
876-18 board for good cause may grant, the person authorized to
877-19 engage in the sale of preneed contracts shall file with the
878-20 commissioner board a full and true statement of his or her
879-21 financial condition, transactions, and affairs, prepared on a
880-22 basis as adopted by a rule of the commissioner board, as of
881-23 the preceding fiscal period or at such other time or times as
882-24 the commissioner board may provide by rule, together with
883-25 information and data which may be required by the commissioner
884-26 board.
885-Page 33 1 "(b) The statement shall include all of the
886-2 following:
887-3 "(1) The types of preneed contracts proposed to be
888-4 written and the type of funding vehicle vehicles to be used.
889-5 "(2) The name and address of the place of business
890-6 of the person offering to write preneed contracts.
891-7 "(3) Evidence that the person offering the statement
892-8 has the following qualifications:
893-9 "a. Has the ability to discharge his or her preneed
894-10 liabilities as they become due in the normal course of
895-11 business and has sufficient funds available during the
896-12 calendar year to perform his or her obligations under the
897-13 contract.
898-14 "b. Has complied with the trust requirements for the
899-15 funds received under contracts issued by himself or herself as
900-16 hereinafter described.
901-17 "c. Has disbursed interest, dividends, or accretions
902-18 earned by trust funds, in accordance with this article chapter
903-19 and rules promulgated adopted hereunder.
904-20 "d. Has complied with this chapter and any rules of
905-21 the commissioner board.
906-22 "(4) Any other information considered necessary by
907-23 the commissioner board to meet the commissioner's board's
908-24 responsibilities under this chapter.
909-25 "(c) If the person is an individual, the statement
910-26 shall be sworn by him or her; if a firm or association, by all
911-Page 34 1 members thereof; or, if a corporation, by any officer of the
912-2 corporation.
913-3 "(d)(1) An application to the commissioner board for
914-4 an initial certificate of authority shall be accompanied by an
915-5 application fee, in an amount to be determined by the
916-6 commissioner board, not to exceed one hundred fifty dollars
917-7 ($150) one hundred ninety-eight dollars ($198). Thereafter,
918-8 each annual application for renewal of a certificate of
919-9 authority shall be accompanied by the appropriate fee as
920-10 determined by the commissioner board not to exceed
921-11 seventy-five dollars ($75) ninety-nine dollars ($99).
922-12 "(2) Any person or entity that is part of a common
923-13 business enterprise that has a certificate of authority issued
924-14 pursuant to this article chapter and elects to operate under a
925-15 name other than that of the common business enterprise shall
926-16 submit an application on a form adopted prescribed by the
927-17 commissioner board to become a branch registrant. Upon the
928-18 approval of the commissioner board that the entity qualifies
929-19 to sell preneed contracts under this article chapter except
930-20 for the requirements of subparagraph 1. of paragraph a. of
931-21 subdivision (3) of subsection (b) and if the certificate
932-22 holder meets the requirements of paragraph a. subparagraph 1.,
933-23 a branch registration shall be issued. Each branch registrant
934-24 may operate under the certificate of authority of the common
935-25 business enterprise upon the payment of a fee established by
936-26 the commissioner board not to exceed one hundred fifty dollars
937-Page 35 1 ($150) one hundred ninety-eight dollars ($198) accompanying
938-2 the application on July September 1 annually.
939-3 "(e) Upon the commissioner board being satisfied
940-4 that the statement and matters which may accompany it the
941-5 statement meet the requirements of this article chapter and of
942-6 its rules, the commissioner board shall issue or renew the
943-7 certificate of authority.
944-8 "(f) The certificate of authority shall expire
945-9 annually on September October 1, unless renewed, or at such
946-10 other time or times as the commissioner board may provide by
947-11 rule.
948-12 "(g) On or before July 1 of a date adopted by the
949-13 board each year, the certificate holder shall file with the
950-14 commissioner board in the form prescribed by the commissioner
951-15 board a full and true statement as to the activities of any
952-16 trust established by it pursuant to this article chapter for
953-17 the preceding calendar year.
954-18 "(h) In addition to any other penalty that may be
955-19 provided for under this article chapter, the commissioner
956-20 board may levy a fine not to exceed fifty dollars ($50) per
957-21 day for each day the certificate holder fails to file its
958-22 annual statement, and the commissioner board may levy a fine
959-23 not to exceed fifty dollars ($50) per day for each day the
960-24 certificate holder fails to file the statement of activities
961-25 of the trust. Upon notice to the certificate holder by the
962-26 commissioner board that the certificate holder has failed to
963-27 file the annual statement or the statement of activities of
964-Page 36 1 the trust, the certificate holder's authority to sell preneed
965-2 contracts shall cease while the default continues.
966-3 "(i) To facilitate uniformity in financial
967-4 statements and to facilitate analysis, the commissioner board
968-5 may by rule adopt a form for financial statements. The holder
969-6 of a certificate of authority may submit a written request to
970-7 the commissioner board to exempt the holder from filing
971-8 financial statements at renewal. The commissioner board may
972-9 waive the requirement for filing a financial statement at
973-10 renewal if all of the following are satisfied:
974-11 "(1) No valid complaint has been filed since the
975-12 last examination audit.
976-13 "(2) No administrative action against the preneed
977-14 entity has been instituted since the last examination audit.
978-15 "(3) The certificate holder certifies that all
979-16 outstanding preneed contracts written by the holder since
980-17 April 30, 2002, are fully funded in accordance with this
981-18 chapter.
982-19 "(4) The certificate holder certifies that it will
983-20 fully fund all preneed contracts with life insurance, annuity,
984-21 or will deposit 100 percent of all funds collected on all
985-22 preneed contracts in trust within 30 days after the end of the
986-23 calendar month in which the funds are collected.
987-24 "(5) The preneed entity has provided to the
988-25 department board in a timely manner all required and requested
989-26 records.
990-Page 37 1 "(6) The preneed entity agrees to file quarterly
991-2 reports of its preneed activity on a form or, in a format, and
992-3 as often as prescribed by the commissioner board.
993-4 "(j) The commissioner board may authorize the
994-5 transfer of certificates of authority and establish fees for
995-6 the transfer in an amount not to exceed one hundred dollars
996-7 ($100) one hundred thirty-two dollars ($132). Upon receipt of
997-8 an application for transfer, the commissioner board may grant
998-9 a temporary certificate of authority to the proposed
999-10 transferee, based upon criteria established by the
1000-11 commissioner board by rule, which criteria shall promote the
1001-12 purposes of this article chapter in protecting the consumer. A
1002-13 temporary certificate of authority shall expire 60 days after
1003-14 issuance unless renewed by the commissioner board.
1004-15 "§27-17A-11.1. §34-13-192.
1005-16 "(a) On a semi-annual basis, within 45 days after
1006-17 the end of each second calendar reporting period or before
1007-18 July 1, each year, the certificate holder shall file a report
1008-19 of its preneed contract activity on a form or in a format
1009-20 prescribed by the commissioner board. The information reported
1010-21 shall include the total number of preneed contracts in force
1011-22 at the end of the previous reporting period calendar year, the
1012-23 total number of preneed contracts sold during the reporting
1013-24 period previous calendar year, the total number of preneed
1014-25 contracts fulfilled during the reporting period previous
1015-26 calendar year, the total number of preneed contracts in force
1016-27 at the end of the reporting period previous calendar year, and
1017-Page 38 1 such other information as may be required by the commissioner
1018-2 board. The report shall be organized by type of funding
1019-3 including, life insurance, annuity, trust, letter of credit,
1020-4 or surety bond. The report shall also provide a certification
1021-5 by the trustee of the amount of assets held by the trust at
1022-6 the beginning of the reporting period and at the end of the
1023-7 reporting period, together with the amount of deposits and
1024-8 withdrawals during the reporting period. If a certificate
1025-9 holder shall twice default in complying with the requirements
1026-10 of this subsection, the commissioner board may require that
1027-11 the certificate holder thereafter submit the report within 45
1028-12 days after the end of each calendar quarter and shall continue
1029-13 so reporting for a time to be determined by the commissioner
1030-14 board.
1031-15 "(b) The certificate holder shall maintain a written
1032-16 log of preneed sales. The log shall be on a form or in a
1033-17 format prescribed by the commissioner board, shall detail all
1034-18 information required by the commissioner board, and shall be
1035-19 available for inspection at any time by the commissioner
1036-20 board.
1037-21 "(c) Each cemetery authority shall maintain a
1038-22 written log of the sale of cemetery interment rights. The log
1039-23 shall be on a form or in a format prescribed by the
1040-24 commissioner board and shall detail all information required
1041-25 by the commissioner board.
1042-26 "§27-17A-12. §34-13-193.
1043-Page 39 1 "(a) Preneed contract forms and related forms shall
1044-2 be filed with and approved by the commissioner board.
1045-3 "(b) Specific disclosure regarding whether,
1046-4 consistent with the requirements of this chapter, the
1047-5 certificate holder is placing certain preneed funds received
1048-6 with the contract in trust, in an annuity, or in insurance, is
1049-7 required in the preneed contract.
1050-8 "(c) Preneed contracts which have been submitted to
1051-9 the commissioner board shall be deemed to have been approved
1052-10 by the commissioner board in the event that the commissioner
1053-11 board fails to notify the certificate holder that approval has
1054-12 been denied within 30 days following submission to the
1055-13 commissioner board.
1056-14 "(d) The board may maintain a statewide database of
1057-15 preneed contracts reported to the board pursuant to subsection
1058-16 (a). The board may make information in this database
1059-17 searchable by the public by means of unique identifiers, or
1060-18 any other means, that the board determines respects the
1061-19 privacy of those involved while also protecting consumers from
1062-20 financial waste by allowing families to determine if a
1063-21 deceased loved one has an existing preneed contract. Any
1064-22 preneed consumer who does not wish for his or her information
1065-23 to appear in this searchable database may opt out by following
1066-24 a process established by the board.
1067-25 "§27-17A-13. §34-13-194.
1068-26 "(a) Except as provided in Sections 27-17A-3 and
1069-27 27-17A-14 34-13-171 and 34-13-195, every preneed contract
1070-Page 40 1 shall require the monies paid to the seller or trustee to be
1071-2 placed in trust in accordance with Article 3 Division 3, for
1072-3 funeral merchandise and services sold by funeral
1073-4 establishments or third party sellers, or Article 4 Division
1074-5 4, for cemetery merchandise and services sold by cemetery
1075-6 authorities.
1076-7 "(b) Although this chapter does not apply to preneed
1077-8 contracts entered into prior to May 1, 2002, a preneed
1078-9 provider which contends that a preneed trust fund which was in
1079-10 effect prior to May 1, 2002, complies with this chapter with
1080-11 respect to the contracts entered into prior to May 1, 2002,
1081-12 may provide to the commissioner board documentary proof
1082-13 thereof. Upon the commissioner board determining that
1083-14 compliance has been established, the pre-existing preneed
1084-15 trust fund assets may be merged with or into the trust fund
1085-16 required under this chapter or continued as the trust fund and
1086-17 that determination by the commissioner board shall be noted on
1087-18 the certificate of authority, and thereafter all preneed
1088-19 contracts covered by the trust fund, including those entered
1089-20 into prior to May 1, 2002, shall be subject to this chapter.
1090-21 "§27-17A-14. §34-13-195.
1091-22 "(a) As an alternative to the trust requirement of
1092-23 Section 27-17A-13 34-13-194, the details of which are set
1093-24 forth in Articles 3 and 4 Divisions 3 and 4, a preneed
1094-25 provider may, with the prior approval of the commissioner
1095-26 board, may purchase a surety bond in an amount not less than
1096-27 the aggregate value of outstanding liabilities on undelivered
1097-Page 41 1 preneed contracts for merchandise, services, and cash
1098-2 advances. For the purposes of this section, the term
1099-3 outstanding liabilities means the original retail amount of
1100-4 services and cash advances and the actual cost to the entity
1101-5 to provide the undelivered merchandise sold on each contract
1102-6 written after April 30, 2002. The surety bond shall be in an
1103-7 amount sufficient to cover the outstanding liability at the
1104-8 time each contract is executed.
1105-9 "(b) The bond shall be made payable to the State of
1106-10 Alabama for the benefit of the commissioner board and of all
1107-11 purchasers of preneed merchandise, services, and cash
1108-12 advances. The bond shall be issued by an insurance company
1109-13 licensed in the State of Alabama and authorized to issue
1110-14 surety bonds and approved by the commissioner board.
1111-15 "(c) The amount of the bond shall be based on a
1112-16 report documenting the outstanding liabilities of the preneed
1113-17 provider for the previous calendar quarter and the projected
1114-18 liability for the immediately following quarter, shall be
1115-19 prepared by the preneed provider using generally accepted
1116-20 accounting principles, and shall be signed by the chief
1117-21 executive officer or chief financial officer of the preneed
1118-22 provider. The report shall be compiled as of the end of the
1119-23 preneed provider's fiscal year and updated quarterly.
1120-24 "(d) The amount of the bond shall be increased or
1121-25 decreased as necessary to correlate with changes in the
1122-26 outstanding liabilities. Further, the commissioner board may
1123-27 order the bond to be increased as necessary to correlate with
1124-Page 42 1 changes in the outstanding liabilities of bonded contracts due
1125-2 to increases in the consumer price index.
1126-3 "(e) If the preneed provider fails to maintain a
1127-4 bond pursuant to this section the preneed provider shall cease
1128-5 the offering for sale and sale of preneed merchandise,
1129-6 services, and cash advances as provided by this chapter or
1130-7 rule of the board.
1131-8 "(f) No surety bond used to comply with this section
1132-9 shall be canceled or subject to cancellation unless at least
1133-10 60 days' advance notice thereof, in writing, is filed with the
1134-11 commissioner board, by the surety company. The cancellation of
1135-12 the bond shall not relieve the obligation of the surety
1136-13 company for claims arising out of contracts issued or
1137-14 otherwise covered before cancellation of the bond. In the
1138-15 event that notice of termination of the bond is filed with the
1139-16 commissioner board, the certificate holder insured thereunder
1140-17 shall, within 30 days of the filing of the notice of
1141-18 termination with the commissioner board, shall provide the
1142-19 commissioner board with a replacement bond or with evidence
1143-20 which is satisfactory to the commissioner board demonstrating
1144-21 that the provisions of this chapter have has been fully
1145-22 complied with. If within 30 days of filing of the notice of
1146-23 termination with the commissioner board no replacement bond
1147-24 acceptable to the commissioner board or no evidence
1148-25 satisfactory to the commissioner board demonstrating that the
1149-26 provisions of this chapter have has been complied with is
1150-27 filed with the commissioner board, the commissioner board
1151-Page 43 1 shall suspend the license of the certificate holder until the
1152-2 certificate holder files a replacement bond acceptable to the
1153-3 commissioner board or demonstrates to the satisfaction of the
1154-4 commissioner board that it has complied with the provisions of
1155-5 this chapter.
1156-6 "(g) Upon prior approval by the commissioner board,
1157-7 the preneed provider may file with the commissioner board a
1158-8 letter of credit in the amount of the outstanding liabilities
1159-9 in lieu of a surety bond, in the form and subject to the terms
1160-10 and conditions evidencing the financial responsibility of the
1161-11 party or parties issuing the letter of credit, and otherwise,
1162-12 as may be prescribed by the commissioner board.
1163-13 "§27-17A-15. §34-13-196.
1164-14 "(a) The commissioner shall board, as often as he or
1165-15 she may deem deemed necessary, examine shall audit the
1166-16 business of any person writing, or holding himself or herself
1167-17 out to be writing, preneed contracts under this chapter to the
1168-18 extent applicable. The examination audit shall be made by
1169-19 designated representatives employed or examiners of the
1170-20 Department of Insurance contracted by the board.
1171-21 "(b) The written report of each examination audit,
1172-22 when completed, shall be filed in the office of the
1173-23 commissioner board and, when so filed, shall not constitute a
1174-24 public record.
1175-25 "(c) Any person being examined audited shall
1176-26 produce, upon request, all records of the person. The
1177-27 designated representative of the commissioner board may at any
1178-Page 44 1 time examine the records and affairs of the person, whether in
1179-2 connection with a formal examination audit or not.
1180-3 "(d) The commissioner board may waive the
1181-4 examination audit requirements of this section if the
1182-5 certificate holder submits audited financial statements.
1183-6 "(e) The person examined audited shall pay the
1184-7 examination audit expenses, travel expense, and per diem
1185-8 subsistence allowance provided for examiners and incurred by
1186-9 the commissioner's board's representatives or examiners
1187-10 auditors in connection with an examination in accordance with
1188-11 Section 27-2-25 audit as prescribed by rule of the board.
1189-12 "(f) Whenever any special audit of the premises,
1190-13 facilities, books, or records of a licensee is necessary based
1191-14 on the failure of the licensee to comply with this chapter or
1192-15 rule adopted by the board, the board shall charge a fee based
1193-16 on the cost of the special audit including, but not limited
1194-17 to, the prorated compensation of board employees involved in
1195-18 the special audit and any expenses incurred.
1196-19 "(g) If the board finds that a certificate of
1197-20 authority holder or licensee has failed to operate in
1198-21 accordance with this chapter and, by their action, has created
1199-22 a deficit of preneed funds entrusted to them by the consumer,
1200-23 then the board may:
1201-24 "(1) Bring an action for injunctive relief against
1202-25 the responsible licensee or the holder of the certificate of
1203-26 authority in the Circuit Court of Montgomery County.
1204-Page 45 1 "(2) Issue an emergency suspension of all licenses
1205-2 held by the holder of the certificate of authority, and its
1206-3 associated personnel, in accordance with the Administrative
1207-4 Procedure Act.
1208-5 "(3) Take any other disciplinary action authorized
1209-6 by this chapter.
1210-7 "§27-17A-16. §34-13-197.
1211-8 "(a) A certificate holder shall be considered
1212-9 inactive upon the acceptance of the surrender of its license
1213-10 by the commissioner board or upon the nonreceipt by the
1214-11 commissioner board of the certificate of authority renewal
1215-12 application and fees.
1216-13 "(b) A certificate holder shall cease all preneed
1217-14 sales to the public upon becoming inactive. The certificate
1218-15 holder shall collect and deposit into trust all of the funds
1219-16 paid toward preneed contracts sold prior to becoming inactive.
1220-17 "(c) Any certificate holder desiring to surrender
1221-18 its license to the commissioner board shall first do all of
1222-19 the following:
1223-20 "(1) File notice with the commissioner board.
1224-21 "(2) Submit copies of its existing trust agreements.
1225-22 "(3) Submit a sample copy of each type of preneed
1226-23 contract sold.
1227-24 "(4) Resolve to the commissioner's satisfaction of
1228-25 the board all findings and violations resulting from the last
1229-26 examination audit conducted.
1230-Page 46 1 "(5) Pay all outstanding fines and invoices due the
1231-2 commissioner board.
1232-3 "(6) Submit its current certificate of authority.
1233-4 "(d) Upon receipt of the notice, the commissioner
1234-5 board shall review the certificate holder's trust funds, trust
1235-6 agreements, and evidence of all outstanding preneed contracts.
1236-7 "(e) After a review to the commissioner's
1237-8 satisfaction of the board, the commissioner board shall
1238-9 terminate the certificate of authority by an order which shall
1239-10 set forth the conditions of termination established by the
1240-11 commissioner board to ensure that the preneed funds will be
1241-12 available for their intended purpose.
1242-13 "(f) The trust fund of the certificate holder shall
1243-14 be held intact and in trust after the certificate holder has
1244-15 become inactive, and the funds in that trust shall be
1245-16 disbursed in accordance with the requirements of the written
1246-17 contracts until the funds have been exhausted.
1247-18 "(g) The commissioner board shall continue to have
1248-19 jurisdiction over the inactive certificate holder as if the
1249-20 certificate were active and to require the reports and inspect
1250-21 the records as the commissioner board deems appropriate so
1251-22 long as there are funds in trust or preneed contracts that are
1252-23 not fulfilled.
1253-24 "(h) In addition to any other Other terms of
1254-25 revocation or suspension ordered pursuant to Chapter 13 of
1255-26 Title 34, the provisions of this chapter may also apply.
1256-27 "§27-17A-17. §34-13-198.
1257-Page 47 1 "(a) Any dissolution or liquidation of a certificate
1258-2 holder shall be deemed to be the liquidation of an insurance
1259-3 company and shall be conducted under the supervision of the
1260-4 commissioner, who shall have all powers with respect thereto
1261-5 granted to the commissioner under Chapter 32 with respect to
1262-6 the liquidation of insurance companies.
1263-7 "(b) The commissioner may apply for an order
1264-8 directing the commissioner to liquidate a certificate holder
1265-9 upon any one or more grounds set out in Section 27-32-6 or
1266-10 when, in the commissioner's opinion, the continued operation
1267-11 of the certificate holder would be hazardous either to
1268-12 purchasers, beneficiaries, or to the people of this state.
1269-13 "The board may fine and revoke, suspend, or place on
1270-14 probation the certificate of authority and the establishment
1271-15 license of a certificate holder on any of the following
1272-16 grounds:
1273-17 "(1) The certificate holder is impaired or
1274-18 insolvent.
1275-19 "(2) The certificate holder has refused to submit,
1276-20 or has withheld, any of its books, records, accounts, or
1277-21 affairs to audit by the board.
1278-22 "(3) The certificate holder has concealed or removed
1279-23 records or preneed assets, or both.
1280-24 "(4) The certificate holder has failed to comply
1281-25 with an order of the board.
1282-26 "(5) The certificate holder has transferred, or
1283-27 attempted to transfer, substantially its entire property or
1284-Page 48 1 business, or has entered into any transaction the effect of
1285-2 which is to merge substantially its entire property or
1286-3 business with that of any other certificate holder, person,
1287-4 corporation, or entity without first having obtained the
1288-5 written approval of the board.
1289-6 "(6) The certificate holder has willfully violated
1290-7 its articles of incorporation or any law of this state,
1291-8 including any rule of the board.
1292-9 "(7) The certificate holder has an officer,
1293-10 director, or manager who has refused to be audited under oath
1294-11 concerning the affairs of the certificate holder.
1295-12 "(8) If the board determines that the continued
1296-13 operation of the certificate holder would be hazardous to
1297-14 purchasers, beneficiaries, or residents of this state.
1298-15 "§27-17A-18. §34-13-199.
1299-16 "(a) All individuals who offer preneed contracts to
1300-17 the public, or who execute preneed contracts on behalf of a
1301-18 certificate holder, shall be registered with the commissioner
1302-19 board as preneed sales agents, pursuant to this article
1303-20 chapter.
1304-21 "(b) All preneed sales agents and funeral directors
1305-22 acting as preneed sales agents shall be affiliated with the
1306-23 certificate holder that they are representing.
1307-24 "(c) A certificate holder shall be responsible for
1308-25 the activities of all preneed sales agents and all funeral
1309-26 directors acting as preneed sales agents, who are affiliated
1310-27 with the certificate holder and who perform any type of
1311-Page 49 1 preneed-related activity on behalf of the certificate holder.
1312-2 In addition to the preneed sales agents and funeral directors
1313-3 acting as preneed sales agents, each certificate holder shall
1314-4 also be subject to discipline if its preneed sales agents or
1315-5 funeral directors acting as preneed sales agents violate any
1316-6 provision of this article chapter.
1317-7 "(d) A preneed sales agent and a funeral director
1318-8 acting as a preneed sales agent shall be authorized to may
1319-9 sell, offer, and execute preneed contracts on behalf of all
1320-10 properly licensed entities owned or operated by the sponsoring
1321-11 certificate holder.
1322-12 "(e) An individual may begin functioning operating
1323-13 as a preneed sales agent as soon as a completed application
1324-14 for registration, as set forth in subsection (g), is sent to
1325-15 the commissioner approved by the board.
1326-16 "(f)(1) The qualifications for a preneed sales agent
1327-17 are as follows:
1328-18 "(1)a. The applicant must be at least 18 years of
1329-19 age.
1330-20 "(2)b. The applicant must be in good standing with
1331-21 the commissioner board.
1332-22 "(3)c. The applicant must may not have any felony or
1333-23 misdemeanor convictions that relate to any activity regulated
1334-24 by this chapter or a crime involving moral turpitude, as
1335-25 defined by this chapter.
1336-Page 50 1 "d. The applicant shall be of good moral character
1337-2 and submit to a criminal history background check pursuant to
1338-3 subdivision (2).
1339-4 "(2) An applicant for licensure as a preneed sales
1340-5 agent shall submit to the board, on a form sworn to by the
1341-6 applicant, his or her name, date of birth, Social Security
1342-7 number, and two complete sets of fingerprints for completion
1343-8 of a criminal history background check. The board shall submit
1344-9 the fingerprints to the Alabama State Law Enforcement Agency
1345-10 for a state criminal history background check. The
1346-11 fingerprints shall be forwarded by the agency to the Federal
1347-12 Bureau of Investigation for a national criminal history
1348-13 background check. Costs associated with conducting a criminal
1349-14 history background check shall be paid by the applicant. The
1350-15 board shall keep information received pursuant to this
1351-16 subdivision confidential, except that information received and
1352-17 relied upon in denying the issuance of a certificate of
1353-18 authority may be disclosed if necessary to support the denial.
1354-19 All character information, including the information obtained
1355-20 through the criminal history background checks, shall be
1356-21 considered in licensure decisions to the extent permissible by
1357-22 all applicable laws.
1358-23 "(g) An application for registration as a preneed
1359-24 sales agent shall be submitted to the commissioner board with
1360-25 an application fee determined by the commissioner board, but
1361-26 not to exceed twenty-five dollars ($25) thirty-three dollars
1362-27 ($33), by the certificate holder in a form that has been
1363-Page 51 1 prescribed by commissioner board rule and approved by the
1364-2 commissioner. The application shall contain, at a minimum, all
1365-3 of the following:
1366-4 "(1) The name, address, Social Security number, and
1367-5 date of birth of the applicant and any other information as
1368-6 the commissioner board may reasonably require of the
1369-7 applicant.
1370-8 "(2) The name, address, and license number of the
1371-9 sponsoring certificate holder.
1372-10 "(3) A representation, signed by the applicant, that
1373-11 the applicant meets the requirements set forth in subsection
1374-12 (f).
1375-13 "(4) A representation, signed by the certificate
1376-14 holder, that the applicant is authorized to offer, sell, and
1377-15 sign preneed contracts on behalf of the certificate holder,
1378-16 and that the certificate holder has trained the applicant in
1379-17 the provisions of this article chapter relating to preneed
1380-18 sales, the provisions of the certificate holder's preneed
1381-19 contract, and the nature of the merchandise, services, or
1382-20 burial rights sold by the certificate holder.
1383-21 "(5) A statement indicating whether the applicant
1384-22 has any type of working or agency relationship with any other
1385-23 certificate holder or insurance company.
1386-24 "(h) An individual may be registered as a preneed
1387-25 sales agent on behalf of more than one certificate holder,
1388-26 provided that the individual has received the written consent
1389-27 of all certificate holders.
1390-Page 52 1 "(i) A certificate holder who has registered a
1391-2 preneed sales agent shall notify the commissioner board within
1392-3 30 days after the individual's status as a preneed sales agent
1393-4 has been terminated.
1394-5 "(j) Upon receipt of an application that complies
1395-6 with all of the requirements of subsection (g), the
1396-7 commissioner board shall register the applicant. The
1397-8 commissioner shall by rule board, in accordance with this
1398-9 chapter, shall provide for annual renewal of registration upon
1399-10 receipt of a renewal application and a renewal fee not to
1400-11 exceed twenty-five dollars ($25) thirty-three dollars ($33) as
1401-12 set by the commissioner board.
1402-13 "§27-17A-19. §34-13-200.
1403-14 "No person shall engage in this state in any trade
1404-15 practice which is addressed in the Alabama Deceptive Trade
1405-16 Practices Act (Section 8-19-1 et seq.), Chapter 19 of Title 8,
1406-17 or as determined pursuant to this chapter to be, an unfair
1407-18 method of competition or an unfair or deceptive act or
1408-19 practice.
1409-20 "§27-17A-20. §34-13-201.
1410-21 "(a) Whenever the commissioner board has reason to
1411-22 believe that any person has engaged, or is engaging, in this
1412-23 state in any unfair method of competition or any unfair or
1413-24 deceptive act or practice as defined in this article chapter,
1414-25 or is engaging in the sale of preneed contracts without being
1415-26 properly licensed as required by this article chapter, or is
1416-27 otherwise acting in violation of this chapter, and that a
1417-Page 53 1 proceeding by the commissioner board in respect thereto would
1418-2 be in the interest of the public, the commissioner board shall
1419-3 institute a proceeding in accordance with this section.
1420-4 "(b) A statement of charges, notice, or order or
1421-5 other process under this chapter may be served by anyone duly
1422-6 authorized by the commissioner board. Service may be made
1423-7 either in the manner provided by law for service of process in
1424-8 civil actions or by certifying and mailing a copy of the
1425-9 statement to the person affected by the statement, notice, or
1426-10 order or other process at his or her or its residence or
1427-11 principal office or place of business. The verified return by
1428-12 the person so serving the statement, notice, or order or other
1429-13 process, setting forth the manner of the service, shall be
1430-14 proof of the service; and the return postcard receipt for the
1431-15 statement, notice, or order or other process, certified and
1432-16 mailed as provided in this subsection, shall be proof of
1433-17 service of the statement, notice, or order or other process.
1434-18 "(c) The commissioner board shall conduct or cause
1435-19 to have conducted a hearing in accordance with Article 1 of
1436-20 Chapter 2 this chapter, and shall, during the conduct of the
1437-21 hearing, have those powers necessary to enforce this chapter
1438-22 and rules of the board; however, the penalties for failure to
1439-23 comply with a subpoena or with an order directing discovery
1440-24 shall be limited to a fine not to exceed one thousand dollars
1441-25 ($1,000) per violation. All evidence introduced and presented
1442-26 in a hearing conducted under this chapter shall be deemed
1443-27 public information.
1444-Page 54 1 "§27-17A-21. §34-13-202.
1445-2 "(a) If the commissioner board finds that one or
1446-3 more grounds exist for the discretionary suspension or
1447-4 revocation of a certificate of authority or establishment
1448-5 license issued under this article chapter, the commissioner
1449-6 may board, in lieu of the suspension or revocation, may impose
1450-7 a fine upon the certificate holder in an amount not to exceed
1451-8 one thousand dollars ($1,000) for each nonwillful violation
1452-9 and in an amount not to exceed ten thousand dollars ($10,000)
1453-10 for each willful violation.
1454-11 "(b) The commissioner board may grant not more than
1455-12 30 days from the date of the order for the payment of any
1456-13 fine.
1457-14 "§27-17A-22. §34-13-203.
1458-15 "(a)(1) A person who knowingly receives payments for
1459-16 a preneed contract without having a valid certificate of
1460-17 authority:
1461-18 "a. Commits a Class B felony, punishable as provided
1462-19 by law, as to each contract on which the payments collected
1463-20 equal or exceed, in the aggregate, two thousand five hundred
1464-21 dollars ($2,500).
1465-22 "b. Commits a Class C felony, punishable as provided
1466-23 by law, as to each contract on which the payments collected
1467-24 are between, in the aggregate, five hundred dollars ($500) and
1468-25 two thousand five hundred dollars ($2,500).
1469-26 "c. Commits a Class A misdemeanor, punishable as
1470-27 provided by law, as to each contract on which the payments
1471-Page 55 1 collected do not exceed, in the aggregate, five hundred
1472-2 dollars ($500).
1473-3 "(2) In addition to the criminal penalty imposed
1474-4 under subdivision (1), upon conviction of an offense under
1475-5 subdivision (1), a person may not thereafter obtain a
1476-6 certificate of authority or register as a preneed sales agent.
1477-7 "(b)(1) A person who willfully fails to timely
1478-8 deposit the amount required to be so deposited under this
1479-9 chapter in a preneed merchandise and services trust or
1480-10 endowment care trust, or who knowingly receives payments for
1481-11 or executes a preneed contract without having a valid license
1482-12 as a preneed sales agent:
1029+6 "(4) Any other information considered necessary by
1030+7 the commissioner board to meet the commissioner's board's
1031+8 responsibilities under this chapter.
1032+9 "(c) If the person is an individual, the statement
1033+10 shall be sworn by him or her; if a firm or association, by all
1034+11 members thereof; or, if a corporation, by any officer of the
1035+12 corporation.
1036+13 "(d)(1) An application to the commissioner board for
1037+14 an initial certificate of authority shall be accompanied by an
1038+15 application fee, in an amount to be determined by the
1039+16 commissioner board, not to exceed one hundred fifty dollars
1040+17 ($150) one thousand dollars ($1,000). Thereafter, each annual
1041+18 application for renewal of a certificate of authority shall be
1042+19 accompanied by the appropriate fee as determined by the
1043+20 commissioner board not to exceed seventy-five dollars ($75)
1044+21 one thousand dollars ($1,000).
1045+22 "(2) Any person or entity that is part of a common
1046+23 business enterprise that has a certificate of authority issued
1047+24 pursuant to this article chapter and elects to operate under a
1048+25 name other than that of the common business enterprise shall
1049+26 submit an application on a form adopted prescribed by the
1050+27 commissioner board to become a branch registrant. Upon the
1051+Page 39 1 approval of the commissioner board that the entity qualifies
1052+2 to sell preneed contracts under this article chapter except
1053+3 for the requirements of subparagraph 1. of paragraph a. of
1054+4 subdivision (3) of subsection (b) and if the certificate
1055+5 holder meets the requirements of paragraph a. subparagraph 1.,
1056+6 a branch registration shall be issued. Each branch registrant
1057+7 may operate under the certificate of authority of the common
1058+8 business enterprise upon the payment of a fee established by
1059+9 the commissioner board not to exceed one hundred fifty dollars
1060+10 ($150) one thousand dollars ($1,000) accompanying the
1061+11 application on July September 1 annually.
1062+12 "(e) Upon the commissioner board being satisfied
1063+13 that the statement and matters which may accompany it the
1064+14 statement meet the requirements of this article chapter and of
1065+15 its rules, the commissioner board shall issue or renew the
1066+16 certificate of authority.
1067+17 "(f) The certificate of authority shall expire
1068+18 annually on September October 1, unless renewed, or at such
1069+19 other time or times as the commissioner board may provide by
1070+20 rule.
1071+21 "(g) On or before July 1 of a date certain adopted
1072+22 by the board each year, the certificate holder shall file with
1073+23 the commissioner board in the form prescribed by the
1074+24 commissioner board a full and true statement as to the
1075+25 activities of any trust established by it pursuant to this
1076+26 article chapter for the preceding calendar year.
1077+Page 40 1 "(h) In addition to any other penalty that may be
1078+2 provided for under this article chapter, the commissioner
1079+3 board may levy a fine not to exceed fifty dollars ($50) per
1080+4 day for each day the certificate holder fails to file its
1081+5 annual statement, and the commissioner board may levy a fine
1082+6 not to exceed fifty dollars ($50) per day for each day the
1083+7 certificate holder fails to file the statement of activities
1084+8 of the trust. Upon notice to the certificate holder by the
1085+9 commissioner board that the certificate holder has failed to
1086+10 file the annual statement or the statement of activities of
1087+11 the trust, the certificate holder's authority to sell preneed
1088+12 contracts shall cease while the default continues.
1089+13 "(i) To facilitate uniformity in financial
1090+14 statements and to facilitate analysis, the commissioner board
1091+15 may by rule adopt a form for financial statements. The holder
1092+16 of a certificate of authority may submit a written request to
1093+17 the commissioner board to exempt the holder from filing
1094+18 financial statements at renewal. The commissioner board may
1095+19 waive the requirement for filing a financial statement at
1096+20 renewal if all of the following are satisfied:
1097+21 "(1) No valid complaint has been filed since the
1098+22 last examination audit.
1099+23 "(2) No administrative action against the preneed
1100+24 entity has been instituted since the last examination audit.
1101+25 "(3) The certificate holder certifies that all
1102+26 outstanding preneed contracts written by the holder since
1103+Page 41 1 April 30, 2002, are fully funded in accordance with this
1104+2 chapter.
1105+3 "(4) The certificate holder certifies that it will
1106+4 fully fund all preneed contracts with life insurance, annuity,
1107+5 or will deposit 100 percent of all funds collected on all
1108+6 preneed contracts in trust within 30 days after the end of the
1109+7 calendar month in which the funds are collected.
1110+8 "(5) The preneed entity has provided to the
1111+9 department board in a timely manner all required and requested
1112+10 records.
1113+11 "(6) The preneed entity agrees to file quarterly
1114+12 reports of its preneed activity on a form or, in a format, and
1115+13 as often as prescribed by the commissioner board.
1116+14 "(j) The commissioner board may authorize the
1117+15 transfer of certificates of authority and establish fees for
1118+16 the transfer in an amount not to exceed one hundred dollars
1119+17 ($100) one thousand dollars ($1,000). Upon receipt of an
1120+18 application for transfer, the commissioner board may grant a
1121+19 temporary certificate of authority to the proposed transferee,
1122+20 based upon criteria established by the commissioner board by
1123+21 rule, which criteria shall promote the purposes of this
1124+22 article chapter in protecting the consumer. A temporary
1125+23 certificate of authority shall expire 60 days after issuance
1126+24 unless renewed by the commissioner board. A certificate of
1127+25 authority may not be transferred without the written approval
1128+26 of the board.
1129+27 "§27-17A-11.1.§34-13-192.
1130+Page 42 1 "(a) On a semi-annual basis, within 45 days after
1131+2 the end of each second calendar reporting period or before
1132+3 July 1, each year, the certificate holder shall file a report
1133+4 of its preneed contract activity on a form or in a format
1134+5 prescribed by the commissioner board. The information reported
1135+6 shall include the total number of preneed contracts in force
1136+7 at the end of the previous reporting period calendar year, the
1137+8 total number of preneed contracts sold during the reporting
1138+9 period previous calendar year, the total number of preneed
1139+10 contracts fulfilled during the reporting period previous
1140+11 calendar year, the total number of preneed contracts in force
1141+12 at the end of the reporting period previous calendar year, and
1142+13 such other information as may be required by the commissioner
1143+14 board. The report shall be organized by type of funding
1144+15 including, life insurance, annuity, trust, letter of credit,
1145+16 or surety bond. The report shall also provide a certification
1146+17 by the trustee of the amount of assets held by the trust at
1147+18 the beginning of the reporting period and at the end of the
1148+19 reporting period, together with the amount of deposits and
1149+20 withdrawals during the reporting period. If a certificate
1150+21 holder shall twice default in complying with the requirements
1151+22 of this subsection, the commissioner may require that the
1152+23 certificate holder thereafter submit the report within 45 days
1153+24 after the end of each calendar quarter and shall continue so
1154+25 reporting for a time to be determined by the commissioner A
1155+26 certificate of authority may not be renewed until the
1156+Page 43 1 certificate holder has complied with the requirements of this
1157+2 chapter.
1158+3 "(b) The certificate holder shall maintain a written
1159+4 log of preneed sales. The log shall be on a form or in a
1160+5 format prescribed by the commissioner board, shall detail all
1161+6 information required by the commissioner board, and shall be
1162+7 available for inspection at any time by the commissioner
1163+8 board.
1164+9 "(c) Each cemetery authority shall maintain a
1165+10 written log of the sale of cemetery interment rights. The log
1166+11 shall be on a form or in a format prescribed by the
1167+12 commissioner board and shall detail all information required
1168+13 by the commissioner board.
1169+14 "§27-17A-12.§34-13-193.
1170+15 "(a) Preneed contract forms and related forms shall
1171+16 be filed with and approved by the commissioner board.
1172+17 "(b) Specific disclosure regarding whether,
1173+18 consistent with the requirements of this chapter, the
1174+19 certificate holder is placing certain preneed funds received
1175+20 with the contract in trust, in an annuity, or in insurance, is
1176+21 required in the preneed contract.
1177+22 "(c) Preneed contracts which have been submitted to
1178+23 the commissioner board shall be deemed to have been approved
1179+24 by the commissioner board in the event that the commissioner
1180+25 board fails to notify the certificate holder that approval has
1181+26 been denied within 30 days following submission to the
1182+27 commissioner board.
1183+Page 44 1 "§27-17A-13.§34-13-194.
1184+2 "(a) Except as provided in Sections 27-17A-3 and
1185+3 27-17A-14 34-13-171 and 34-13-195, every preneed contract
1186+4 shall require the monies paid to the seller or trustee to be
1187+5 placed in trust in accordance with Article 3 Division 3, for
1188+6 funeral merchandise and services sold by funeral
1189+7 establishments or third party sellers, or Article 4 Division
1190+8 4, for cemetery merchandise and services sold by cemetery
1191+9 authorities.
1192+10 "(b) Although this chapter does not apply to preneed
1193+11 contracts entered into prior to May 1, 2002, a preneed
1194+12 provider which contends that a preneed trust fund which was in
1195+13 effect prior to May 1, 2002, complies with this chapter with
1196+14 respect to the contracts entered into prior to May 1, 2002,
1197+15 may provide to the commissioner board documentary proof
1198+16 thereof. Upon the commissioner board determining that
1199+17 compliance has been established, the pre-existing preneed
1200+18 trust fund assets may be merged with or into the trust fund
1201+19 required under this chapter or continued as the trust fund and
1202+20 that determination by the commissioner board shall be noted on
1203+21 the certificate of authority, and thereafter all preneed
1204+22 contracts covered by the trust fund, including those entered
1205+23 into prior to May 1, 2002, shall be subject to this chapter.
1206+24 "§27-17A-14.§34-13-195.
1207+25 "(a) As an alternative to the trust requirement of
1208+26 Section 27-17A-13 34-13-194, the details of which are set
1209+27 forth in Articles 3 and 4 Divisions 3 and 4, a preneed
1210+Page 45 1 provider may, with the prior approval of the commissioner
1211+2 board, may purchase a surety bond in an amount not less than
1212+3 the aggregate value of outstanding liabilities on undelivered
1213+4 preneed contracts for merchandise, services, and cash
1214+5 advances. For the purposes of this section, the term
1215+6 outstanding liabilities means the original retail amount of
1216+7 services and cash advances and the actual cost to the entity
1217+8 to provide the undelivered merchandise sold on each contract
1218+9 written after April 30, 2002. The surety bond shall be in an
1219+10 amount sufficient to cover the outstanding liability at the
1220+11 time each contract is executed.
1221+12 "(b) The bond shall be made payable to the State of
1222+13 Alabama for the benefit of the commissioner board and of all
1223+14 purchasers of preneed merchandise, services, and cash
1224+15 advances. The bond shall be issued by an insurance company
1225+16 licensed in the State of Alabama and authorized to issue
1226+17 surety bonds and approved by the commissioner board.
1227+18 "(c) The amount of the bond shall be based on a
1228+19 report documenting the outstanding liabilities of the preneed
1229+20 provider for the previous calendar quarter and the projected
1230+21 liability for the immediately following quarter, shall be
1231+22 prepared by the preneed provider using generally accepted
1232+23 accounting principles, and shall be signed by the chief
1233+24 executive officer or chief financial officer of the preneed
1234+25 provider. The report shall be compiled as of the end of the
1235+26 preneed provider's fiscal year and updated quarterly.
1236+Page 46 1 "(d) The amount of the bond shall be increased or
1237+2 decreased as necessary to correlate with changes in the
1238+3 outstanding liabilities. Further, the commissioner board may
1239+4 order the bond to be increased as necessary to correlate with
1240+5 changes in the outstanding liabilities of bonded contracts due
1241+6 to increases in the consumer price index.
1242+7 "(e) If the preneed provider fails to maintain a
1243+8 bond pursuant to this section the preneed provider shall
1244+9 surrender its certificate of authority and cease the offering
1245+10 for sale and sale of preneed merchandise, services, and cash
1246+11 advances as provided by this chapter or rule of the board. The
1247+12 board, by rule, may levy fines and take remedial action
1248+13 requiring the preneed provider to correct any funding
1249+14 deficiencies.
1250+15 "(f) No surety bond used to comply with this section
1251+16 shall be canceled or subject to cancellation unless at least
1252+17 60 days' advance notice thereof, in writing, is filed with the
1253+18 commissioner board, by the surety company. The cancellation of
1254+19 the bond shall not relieve the obligation of the surety
1255+20 company for claims arising out of contracts issued or
1256+21 otherwise covered before cancellation of the bond. In the
1257+22 event that notice of termination of the bond is filed with the
1258+23 commissioner board, the certificate holder insured thereunder
1259+24 shall, within 30 days of the filing of the notice of
1260+25 termination with the commissioner board, shall provide the
1261+26 commissioner board with a replacement bond or with evidence
1262+27 which is satisfactory to the commissioner board demonstrating
1263+Page 47 1 that the provisions of this chapter have has been fully
1264+2 complied with. If within 30 days of filing of the notice of
1265+3 termination with the commissioner board no replacement bond
1266+4 acceptable to the commissioner board or no evidence
1267+5 satisfactory to the commissioner board demonstrating that the
1268+6 provisions of this chapter have been complied with is filed
1269+7 with the commissioner board, the commissioner board shall
1270+8 suspend the license of the certificate holder until the
1271+9 certificate holder files a replacement bond acceptable to the
1272+10 commissioner board or demonstrates to the satisfaction of the
1273+11 commissioner board that it has complied with the provisions of
1274+12 this chapter.
1275+13 "(g) Upon prior approval by the commissioner board,
1276+14 the preneed provider may file with the commissioner board a
1277+15 letter of credit in the amount of the outstanding liabilities
1278+16 in lieu of a surety bond, in the form and subject to the terms
1279+17 and conditions evidencing the financial responsibility of the
1280+18 party or parties issuing the letter of credit, and otherwise,
1281+19 as may be prescribed by the commissioner board.
1282+20 "§27-17A-15.§34-13-196.
1283+21 "(a) The commissioner shall board, as often as he or
1284+22 she may deem deemed necessary, examine shall audit the
1285+23 business of any person writing, or holding himself or herself
1286+24 out to be writing, preneed contracts under this chapter to the
1287+25 extent applicable. The examination audit shall be made by
1288+26 designated representatives employed or examiners of the
1289+27 Department of Insurance contracted by the board.
1290+Page 48 1 "(b) The written report of each examination audit,
1291+2 when completed, shall be filed in the office of the
1292+3 commissioner and, when so filed, shall not constitute a public
1293+4 record with the board.
1294+5 "(c) Any person being examined audited shall
1295+6 produce, upon request, all records of the person. The
1296+7 designated representative of the commissioner board may at any
1297+8 time examine the records and affairs of the person, whether in
1298+9 connection with a formal examination audit or not.
1299+10 "(d) The commissioner board may waive the
1300+11 examination audit requirements of this section if the
1301+12 certificate holder submits audited financial statements.
1302+13 "(e) The person examined audited shall pay the
1303+14 examination expenses, travel expense and per diem subsistence
1304+15 allowance provided for examiners and incurred by the
1305+16 commissioner's representatives or examiners in connection with
1306+17 an examination in accordance with Section 27-2-25 board an
1307+18 audit fee, in an amount determined by the board, not to exceed
1308+19 one thousand dollars, ($1,000) per audit day.
1309+20 "(f) Whenever any special audit of the premises,
1310+21 facilities, books, or records of a licensee is necessary based
1311+22 on the failure of the licensee to comply with this chapter or
1312+23 rule adopted by the board, the board shall charge a fee based
1313+24 on the cost of the special audit including, but not limited
1314+25 to, the prorated compensation of board employees involved in
1315+26 the special audit and any expenses incurred.
1316+Page 49 1 "(g) The board may suspend the certificate of
1317+2 authority of any person that fails to pay an audit fee to the
1318+3 board within 30 days after the invoice date. Upon suspension,
1319+4 a certificate holder shall immediately cease offering goods
1320+5 and services on a preneed basis.
1321+6 "(h) The board may conduct and enforce, by all
1322+7 appropriate and available means, any audit under oath in any
1323+8 other state or territory of the United States in which an
1324+9 officer, director, or manager may then presently be, to the
1325+10 full extent permitted by law of the other state or territory,
1326+11 this special authorization considered.
1327+12 "(i) If the board finds that a certificate of
1328+13 authority holder or licensee has failed to operate in
1329+14 accordance with this chapter and, by their action, has created
1330+15 a deficit of preneed funds entrusted to them by the consumer,
1331+16 then the board may:
1332+17 "(1) Bring an action for injunctive relief against
1333+18 the responsible licensee or the holder of the certificate of
1334+19 authority in the Circuit Court of Montgomery County.
1335+20 "(2) Issue an emergency suspension of all licenses
1336+21 held by the holder of the certificate of authority, and its
1337+22 associated personnel, in accordance with the Administrative
1338+23 Procedure Act.
1339+24 "(3) Take any other disciplinary action authorized
1340+25 by this chapter.
1341+26 "§27-17A-16.§34-13-197.
1342+Page 50 1 "(a) A certificate holder shall be considered
1343+2 inactive upon the acceptance of the surrender of its license
1344+3 by the commissioner board or upon the nonreceipt by the
1345+4 commissioner board of the certificate of authority renewal
1346+5 application and fees.
1347+6 "(b) A certificate holder shall cease all preneed
1348+7 sales to the public upon becoming inactive. The certificate
1349+8 holder shall collect and deposit into trust all of the funds
1350+9 paid toward preneed contracts sold prior to becoming inactive.
1351+10 "(c) Any certificate holder desiring to surrender
1352+11 its license to the commissioner board shall first do all of
1353+12 the following:
1354+13 "(1) File notice with the commissioner board.
1355+14 "(2) Submit copies of its existing trust agreements.
1356+15 "(3) Submit a sample copy of each type of preneed
1357+16 contract sold.
1358+17 "(4) Resolve to the commissioner's satisfaction of
1359+18 the board all findings and violations resulting from the last
1360+19 examination audit conducted.
1361+20 "(5) Pay all outstanding fines and invoices due the
1362+21 commissioner board.
1363+22 "(6) Submit its current certificate of authority.
1364+23 "(d) Upon receipt of the notice, the commissioner
1365+24 board shall review the certificate holder's trust funds, trust
1366+25 agreements, and evidence of all outstanding preneed contracts.
1367+26 "(e) After a review to the commissioner's
1368+27 satisfaction of the board, the commissioner board shall
1369+Page 51 1 terminate the certificate of authority by an order which shall
1370+2 set forth the conditions of termination established by the
1371+3 commissioner board to ensure that the preneed funds will be
1372+4 available for their intended purpose.
1373+5 "(f) The trust fund of the certificate holder shall
1374+6 be held intact and in trust after the certificate holder has
1375+7 become inactive, and the funds in that trust shall be
1376+8 disbursed in accordance with the requirements of the written
1377+9 contracts until the funds have been exhausted.
1378+10 "(g) The commissioner board shall continue to have
1379+11 jurisdiction over the inactive certificate holder as if the
1380+12 certificate were active and to require the reports and inspect
1381+13 the records as the commissioner board deems appropriate so
1382+14 long as there are funds in trust or preneed contracts that are
1383+15 not fulfilled.
1384+16 "(h) In addition to any other Other terms of
1385+17 revocation or suspension ordered pursuant to Chapter 13 of
1386+18 Title 34, the provisions of this chapter may also apply.
1387+19 "§27-17A-17.§34-13-198.
1388+20 "(a) Any dissolution or liquidation of a certificate
1389+21 holder shall be deemed to be the liquidation of an insurance
1390+22 company and shall be conducted under the supervision of the
1391+23 commissioner, who shall have all powers with respect thereto
1392+24 granted to the commissioner under Chapter 32 with respect to
1393+25 the liquidation of insurance companies.
1394+26 "(b) The commissioner may apply for an order
1395+27 directing the commissioner to liquidate a certificate holder
1396+Page 52 1 upon any one or more grounds set out in Section 27-32-6 or
1397+2 when, in the commissioner's opinion, the continued operation
1398+3 of the certificate holder would be hazardous either to
1399+4 purchasers, beneficiaries, or to the people of this state.
1400+5 "The board may fine and revoke, suspend, or place on
1401+6 probation the certificate of authority and the establishment
1402+7 license of a certificate holder on any of the following
1403+8 grounds:
1404+9 "(1) The certificate holder is impaired or
1405+10 insolvent.
1406+11 "(2) The certificate holder has refused to submit,
1407+12 or has withheld, any of its books, records, accounts, or
1408+13 affairs to audit by the board.
1409+14 "(3) The certificate holder has concealed or removed
1410+15 records or preneed assets, or both.
1411+16 "(4) The certificate holder has failed to comply
1412+17 with an order of the board.
1413+18 "(5) The certificate holder has transferred, or
1414+19 attempted to transfer, substantially its entire property or
1415+20 business, or has entered into any transaction the effect of
1416+21 which is to merge substantially its entire property or
1417+22 business with that of any other certificate holder, person,
1418+23 corporation, or entity without first having obtained the
1419+24 written approval of the board.
1420+25 "(6) The certificate holder has willfully violated
1421+26 its articles of incorporation or any law of this state,
1422+27 including any rule of the board.
1423+Page 53 1 "(7) The certificate holder has an officer,
1424+2 director, or manager who has refused to be audited under oath
1425+3 concerning the affairs of the certificate holder. The Board
1426+4 may conduct and enforce by all appropriate and available means
1427+5 any audit under oath in any other state or territory of the
1428+6 United States in which the officer, director, or manager may
1429+7 then presently be, to the full extent permitted by law of the
1430+8 other state or territory, this special authorization
1431+9 considered.
1432+10 "(8) The certificate holder has been or is the
1433+11 subject of an application for the appointment of a receiver,
1434+12 trustee, custodian, or sequestrate of the certificate holder
1435+13 or its property otherwise than pursuant to this chapter or
1436+14 rule of the board, but only if the appointment has been made,
1437+15 or is imminent, and its effect is, or would be, to oust the
1438+16 courts of this state of jurisdiction under this section.
1439+17 "(9) The certificate holder has consented to an
1440+18 order through a majority of its directors, stockholders, or
1441+19 subscribers.
1442+20 "(10) The certificate holder has failed to pay a
1443+21 final judgement entered against it in this state upon any
1444+22 contract issued or assumed by it, within 30 days after the
1445+23 judgment became final, or within 30 days after the time for
1446+24 taking an appeal has expired, or within 30 days after
1447+25 dismissal of an appeal before final termination, whichever
1448+26 date is the later.
1449+Page 54 1 "(11) If the board determines that the continued
1450+2 operation of the certificate holder would be hazardous to
1451+3 purchasers, beneficiaries, or residents of this state.
1452+4 "§27-17A-18.§34-13-199.
1453+5 "(a) All individuals who offer preneed contracts to
1454+6 the public, or who execute preneed contracts on behalf of a
1455+7 certificate holder, shall be registered with the commissioner
1456+8 board as preneed sales agents, pursuant to this article
1457+9 chapter.
1458+10 "(b) All preneed sales agents and funeral directors
1459+11 acting as preneed sales agents shall be affiliated with the
1460+12 certificate holder that they are representing.
1461+13 "(c) A certificate holder shall be responsible for
1462+14 the activities of all preneed sales agents and all funeral
1463+15 directors acting as preneed sales agents, who are affiliated
1464+16 with the certificate holder and who perform any type of
1465+17 preneed-related activity on behalf of the certificate holder.
1466+18 In addition to the preneed sales agents and funeral directors
1467+19 acting as preneed sales agents, each certificate holder shall
1468+20 also be subject to discipline if its preneed sales agents or
1469+21 funeral directors acting as preneed sales agents violate any
1470+22 provision of this article chapter.
1471+23 "(d) A preneed sales agent and a funeral director
1472+24 acting as a preneed sales agent shall be authorized to may
1473+25 sell, offer, and execute preneed contracts on behalf of all
1474+26 properly licensed entities owned or operated by the sponsoring
1475+27 certificate holder.
1476+Page 55 1 "(e) An individual may begin functioning operating
1477+2 as a preneed sales agent as soon as a completed application
1478+3 for registration, as set forth in subsection (g), is sent to
1479+4 the commissioner approved by the board.
1480+5 "(f)(1) The qualifications for a preneed sales agent
1481+6 are as follows:
1482+7 "(1)a. The applicant must be at least 18 years of
1483+8 age.
1484+9 "(2)b. The applicant must be in good standing with
1485+10 the commissioner board.
1486+11 "(3)c. The applicant must may not have any felony or
1487+12 misdemeanor convictions that relate to any activity regulated
1488+13 by this chapter or a crime involving moral turpitude, as
1489+14 defined by this chapter.
1490+15 "d. The applicant shall be of good moral character
1491+16 and submit to a criminal history background check pursuant to
1492+17 subdivision (2).
1493+18 "(2) An applicant for licensure as a preneed sales
1494+19 agent shall submit to the board, on a form sworn to by the
1495+20 applicant, his or her name, date of birth, Social Security
1496+21 number, and two complete sets of fingerprints for completion
1497+22 of a criminal history background check. The board shall submit
1498+23 the fingerprints to the Alabama State Law Enforcement Agency
1499+24 for a state criminal history background check. The
1500+25 fingerprints shall be forwarded by the agency to the Federal
1501+26 Bureau of Investigation for a national criminal history
1502+27 background check. Costs associated with conducting a criminal
1503+Page 56 1 history background check shall be paid by the applicant. The
1504+2 board shall keep information received pursuant to this
1505+3 subdivision confidential, except that information received and
1506+4 relied upon in denying the issuance of a certificate of
1507+5 authority may be disclosed if necessary to support the denial.
1508+6 All character information, including the information obtained
1509+7 through the criminal history background checks, shall be
1510+8 considered in licensure decisions to the extent permissible by
1511+9 all applicable laws.
1512+10 "(g) An application for registration as a preneed
1513+11 sales agent shall be submitted to the commissioner board with
1514+12 an application fee determined by the commissioner board, but
1515+13 not to exceed twenty-five dollars ($25) five hundred dollars
1516+14 ($500), by the certificate holder in a form that has been
1517+15 prescribed by commissioner board rule and approved by the
1518+16 commissioner. The application shall contain, at a minimum, all
1519+17 of the following:
1520+18 "(1) The name, address, Social Security number, and
1521+19 date of birth of the applicant and any other information as
1522+20 the commissioner board may reasonably require of the
1523+21 applicant.
1524+22 "(2) The name, address, and license number of the
1525+23 sponsoring certificate holder.
1526+24 "(3) A representation, signed by the applicant, that
1527+25 the applicant meets the requirements set forth in subsection
1528+26 (f).
1529+Page 57 1 "(4) A representation, signed by the certificate
1530+2 holder, that the applicant is authorized to offer, sell, and
1531+3 sign preneed contracts on behalf of the certificate holder,
1532+4 and that the certificate holder has trained the applicant in
1533+5 the provisions of this article chapter relating to preneed
1534+6 sales, the provisions of the certificate holder's preneed
1535+7 contract, and the nature of the merchandise, services, or
1536+8 burial rights sold by the certificate holder.
1537+9 "(5) A statement indicating whether the applicant
1538+10 has any type of working or agency relationship with any other
1539+11 certificate holder or insurance company.
1540+12 "(h) An individual may be registered as a preneed
1541+13 sales agent on behalf of more than one certificate holder,
1542+14 provided that the individual has received the written consent
1543+15 of all certificate holders.
1544+16 "(i) A certificate holder who has registered a
1545+17 preneed sales agent shall notify the commissioner board within
1546+18 30 days after the individual's status as a preneed sales agent
1547+19 has been terminated.
1548+20 "(j) Upon receipt of an application that complies
1549+21 with all of the requirements of subsection (g), the
1550+22 commissioner board shall register the applicant. The
1551+23 commissioner shall by rule board, in accordance with this
1552+24 chapter, shall provide for annual renewal of registration upon
1553+25 receipt of a renewal application and a renewal fee not to
1554+26 exceed twenty-five dollars ($25) five hundred dollars ($500)
1555+27 as set by the commissioner board.
1556+Page 58 1 "§27-17A-19.§34-13-200.
1557+2 "No person shall engage in this state in any trade
1558+3 practice which is addressed in the Alabama Deceptive Trade
1559+4 Practices Act (Section 8-19-1 et seq.), Chapter 19 of Title 8,
1560+5 or as determined pursuant to this chapter to be, an unfair
1561+6 method of competition or an unfair or deceptive act or
1562+7 practice.
1563+8 "§27-17A-20.§34-13-201.
1564+9 "(a) Whenever the commissioner board has reason to
1565+10 believe that any person has engaged, or is engaging, in this
1566+11 state in any unfair method of competition or any unfair or
1567+12 deceptive act or practice as defined in this article chapter,
1568+13 or is engaging in the sale of preneed contracts without being
1569+14 properly licensed as required by this article chapter, or is
1570+15 otherwise acting in violation of this chapter, and that a
1571+16 proceeding by the commissioner board in respect thereto would
1572+17 be in the interest of the public, the commissioner board shall
1573+18 institute a proceeding in accordance with this section.
1574+19 "(b) A statement of charges, notice, or order or
1575+20 other process under this chapter may be served by anyone duly
1576+21 authorized by the commissioner board. Service may be made
1577+22 either in the manner provided by law for service of process in
1578+23 civil actions or by certifying and mailing a copy of the
1579+24 statement to the person affected by the statement, notice, or
1580+25 order or other process at his or her or its residence or
1581+26 principal office or place of business. The verified return by
1582+27 the person so serving the statement, notice, or order or other
1583+Page 59 1 process, setting forth the manner of the service, shall be
1584+2 proof of the service; and the return postcard receipt for the
1585+3 statement, notice, or order or other process, certified and
1586+4 mailed as provided in this subsection, shall be proof of
1587+5 service of the statement, notice, or order or other process.
1588+6 "(c) The commissioner board shall conduct or cause
1589+7 to have conducted a hearing in accordance with Article 1 of
1590+8 Chapter 2 this chapter, and shall, during the conduct of the
1591+9 hearing, have those powers necessary to enforce this chapter
1592+10 and rules of the board; however, the penalties for failure to
1593+11 comply with a subpoena or with an order directing discovery
1594+12 shall be limited to a fine not to exceed one thousand dollars
1595+13 ($1,000) two thousand five hundred dollars ($2,500) per
1596+14 violation. All evidence introduced and presented in a hearing
1597+15 conducted under this chapter shall be deemed public
1598+16 information.
1599+17 "§27-17A-21.§34-13-202.
1600+18 "(a) If the commissioner board finds that one or
1601+19 more grounds exist for the discretionary suspension or
1602+20 revocation of a certificate of authority or establishment
1603+21 license issued under this article chapter, the commissioner
1604+22 may board, in lieu of the suspension or revocation, may impose
1605+23 a fine upon the certificate holder in an amount not to exceed
1606+24 one thousand dollars ($1,000) two thousand five hundred
1607+25 dollars ($2,500)for each nonwillful violation and in an amount
1608+26 not to exceed ten thousand dollars ($10,000) for each willful
1609+27 violation.
1610+Page 60 1 "(b) The commissioner board may grant not more than
1611+2 30 days from the date of the order for the payment of any
1612+3 fine.
1613+4 "§27-17A-22.§34-13-203.
1614+5 "(a)(1) A person who knowingly receives payments for
1615+6 a preneed contract without having a valid certificate of
1616+7 authority:
1617+8 "a. Commits a Class B felony, punishable as provided
1618+9 by law, as to each contract on which the payments collected
1619+10 equal or exceed, in the aggregate, two thousand five hundred
1620+11 dollars ($2,500).
1621+12 "b. Commits a Class C felony, punishable as provided
1622+13 by law, as to each contract on which the payments collected
1623+14 are between, in the aggregate, five hundred dollars ($500) and
1624+15 two thousand five hundred dollars ($2,500).
1625+16 "c. Commits a Class A misdemeanor, punishable as
1626+17 provided by law, as to each contract on which the payments
1627+18 collected do not exceed, in the aggregate, five hundred
1628+19 dollars ($500).
1629+20 "(2) In addition to the criminal penalty imposed
1630+21 under subdivision (1), upon conviction of an offense under
1631+22 subdivision (1), a person may not thereafter obtain a
1632+23 certificate of authority or register as a preneed sales agent.
1633+24 "(b)(1) A person who willfully fails to timely
1634+25 deposit the amount required to be so deposited under this
1635+26 chapter in a preneed merchandise and services trust or
1636+27 endowment care trust knowingly receives payments for or
1637+Page 61 1 executes a preneed contract without having a valid license as
1638+2 a preneed sales agent:
1639+3 "a. Commits a Class B felony, punishable as provided
1640+4 by law, as to each contract on which the amount due for
1641+5 deposit in trust equals or exceeds, in the aggregate, two
1642+6 thousand five hundred dollars ($2,500).
1643+7 "b. Commits a Class C felony, punishable as provided
1644+8 by law, as to each contract on which the amount due for
1645+9 deposit in trust is less than, in the aggregate, two thousand
1646+10 five hundred dollars ($2,500).
1647+11 "(2) In addition to the criminal penalty imposed
1648+12 under subdivision (1), upon conviction of an offense under
1649+13 subdivision (1), the certificate of authority or preneed sales
1650+14 agent registration held by the person shall be automatically
1651+15 revoked and the person may not thereafter obtain a certificate
1652+16 of authority or register as a preneed sales agent.
1653+17 "(c)(1) A person who willfully fails to timely
1654+18 deposit an amount required to be deposited under this chapter
1655+19 in a preneed merchandise and services trust or endowment care
1656+20 trust:
1657+21 "a. Commits a Class B felony as to each contract on
1658+22 which the amount due for deposit in trust equals or exceeds,
1659+23 in the aggregate, two thousand five hundred dollars ($2,500).
1660+24 "b. Commits a Class C felony as to each contract on
1661+25 which the amount due for deposit in trust is less than, in the
1662+26 aggregate, two thousand five hundred dollars ($2,500).
1663+Page 62 1 "(2) In addition to the criminal penalty imposed
1664+2 under subdivision (1), upon conviction of an offense under
1665+3 subdivision (1), the certificate of authority or preneed sales
1666+4 agent registration held by the person shall be automatically
1667+5 revoked, and the person may not thereafter obtain a
1668+6 certificate of authority, register as a preneed sales agent,
1669+7 register as a cemetery sales agent, or register as the general
1670+8 manager of a cemetery.
1671+9 "(c)(d)(1) A person who knowingly withdraws funds or
1672+10 assets from a preneed merchandise and services trust or
1673+11 endowment care trust in a manner or under circumstances not
1674+12 authorized by this chapter or rule of the board:
14831675 13 "a. Commits a Class B felony, punishable as provided
1484-14 by law, as to each contract on which the amount due for
1485-15 deposit in trust equals or exceeds, in the aggregate, two
1486-16 thousand five hundred dollars ($2,500).
1676+14 by law, if the aggregate amount withdrawn in any single
1677+15 transaction or series of related transactions equals or
1678+16 exceeds two thousand five hundred dollars ($2,500).
14871679 17 "b. Commits a Class C felony, punishable as provided
1488-18 by law, as to each contract on which the amount due for
1489-19 deposit in trust is less than, in the aggregate, two thousand
1490-20 five hundred dollars ($2,500).
1680+18 by law, if the aggregate amount withdrawn in any single
1681+19 transaction or series of related transactions is less than two
1682+20 thousand five hundred dollars ($2,500).
14911683 21 "(2) In addition to the criminal penalty imposed
14921684 22 under subdivision (1), upon conviction of an offense under
14931685 23 subdivision (1), the certificate of authority or preneed sales
14941686 24 agent registration held by the person shall be automatically
1495-25 revoked and the person may not thereafter obtain a certificate
1496-26 of authority or register as a preneed sales agent.
1497-Page 56 1 "(c)(1) A person who knowingly withdraws funds or
1498-2 assets from a preneed merchandise and services trust or
1499-3 endowment care trust in a manner or under circumstances not
1500-4 authorized by this chapter or rule of the board:
1501-5 "a. Commits a Class B felony, punishable as provided
1502-6 by law, if the aggregate amount withdrawn in any single
1503-7 transaction or series of related transactions equals or
1504-8 exceeds two thousand five hundred dollars ($2,500).
1505-9 "b. Commits a Class C felony, punishable as provided
1506-10 by law, if the aggregate amount withdrawn in any single
1507-11 transaction or series of related transactions is less than two
1508-12 thousand five hundred dollars ($2,500).
1509-13 "(2) In addition to the criminal penalty imposed
1510-14 under subdivision (1), upon conviction of an offense under
1511-15 subdivision (1), the certificate of authority or preneed sales
1512-16 agent registration held by the person shall be automatically
1513-17 revoked, and the person may not thereafter obtain a
1514-18 certificate of authority or register as a preneed sales agent.
1515-19 "(d) A person commits a Class C felony, punishable
1516-20 as provided by law, if any of the following occur:
1517-21 "(1) The person knowingly delivers to the
1518-22 commissioner board any official form, report, record, data, or
1519-23 other document required by the commissioner board containing a
1520-24 false statement or false information concerning a matter
1521-25 material to the commissioner board in the exercise of his or
1522-26 her its authority to administer and enforce this chapter.
1523-Page 57 1 "(2) Incident to, or during the course of, an
1524-2 examination audit, inspection, investigation, or other inquiry
1525-3 authorized by this chapter, the person knowingly makes
1526-4 available to a representative of the commissioner board any
1527-5 official form, report, record, data, or other document
1528-6 required by the commissioner board containing a false
1529-7 statement or false information concerning a matter material to
1530-8 the purpose of the examination audit, inspection,
1531-9 investigation, or inquiry.
1532-10 "(3) With respect to the business records of a
1533-11 person engaging in, or who has at any time engaged in, the
1534-12 sale of a preneed contract, a person, with a purpose to use
1535-13 deception as defined in subdivision (1) of Section 13A-8-1,
1536-14 makes false entries in such the records or alters, erases,
1537-15 obliterates, deletes, or removes a correct entry in such the
1538-16 records, fails to make a correct entry in such the records, or
1539-17 prevents the making of a correct entry, or causes the omission
1540-18 of a correct entry in such the records.
1541-19 "(e) Except as otherwise provided in this section
1542-20 chapter, the willful violation of this chapter is a Class A
1543-21 misdemeanor, punishable as provided by law.
1544-22 "(f) The duties and authority of the insurance fraud
1545-23 unit created under Section 27-12A-40, including the powers of
1546-24 the unit's investigators, shall extend to investigations into
1547-25 violations of this section.
1548-26 "§27-17A-23. §34-13-204.
1549-Page 58 1 "The commissioner board, the Attorney General, or
1550-2 any person may bring a civil action against a person or
1551-3 company violating this chapter or rule of the board in
1552-4 Montgomery County or the appropriate court of the county in
1553-5 which the alleged violator resides or has his or her or its
1554-6 principal place of business or in the county wherein the
1555-7 alleged violation occurred. Upon adverse adjudication, the
1556-8 defendant shall be liable for actual damages caused by the
1557-9 violation. The court, as provided by common law, may award
1558-10 punitive damages and may provide equitable relief as it deems
1559-11 proper or necessary, including enjoining the defendant from
1560-12 further violation of this chapter or rule of the board.
1561-13 "§27-17A-24. §34-13-205.
1562-14 The provisions of this chapter are cumulative to
1563-15 rights under the general civil and common law, and no action
1564-16 of the commissioner board may abrogate the rights to damages
1565-17 or other relief in any court.
1566-18 "§27-17A-25. §34-13-206.
1567-19 "(a) All fees collected by the commissioner board
1568-20 pursuant to this chapter shall be deposited into the State
1569-21 Treasury to the credit of the Insurance Department Fund
1570-22 Alabama State Funeral Service Fund.
1571-23 "(b) All fines collected by the commissioner board
1572-24 pursuant to this chapter shall be deposited into the State
1573-25 Treasury to the credit of the State General Fund Alabama State
1574-26 Funeral Service Fund.
1575-Page 59 1 "(c) The commissioner board may use funds available
1576-2 from any source including, but not limited to, grants,
1577-3 appropriations, and gifts, for any purpose in the enforcement
1578-4 of this chapter."
1579-5 Section 4. Sections 27-17A-30, 27-17A-31, 27-17A-32,
1580-6 27-17A-33, and 27-17A-34 of the Code of Alabama 1975, are
1581-7 amended and renumbered as Division 3 of Article 5 of Chapter
1582-8 13 of Title 34, Code of Alabama 1975, to read as follows:
1583-9 "Division 3. Funeral Merchandise and Services Trust
1584-10 Fund.
1585-11 "§27-17A-30. §34-13-230.
1586-12 "To comply with the trust requirement of subsection
1587-13 (a) of Section 27-17A-13 34-13-194, all certificate holders
1588-14 providing preneed contracts for funeral services or funeral
1589-15 merchandise shall be subject to this article chapter.
1590-16 "§27-17A-31. §34-13-231.
1591-17 "(a) Any person who is paid, collects, or receives
1592-18 funds under a preneed contract for funeral services or funeral
1593-19 merchandise to be funded by trust shall deposit in trust an
1594-20 amount at least equal to the sum of 75 percent of the amount
1595-21 collected on the purchase price for all funeral services and
1596-22 funeral merchandise sold, transportation, and facilities
1597-23 rented other than outer burial containers, 60 percent of the
1598-24 amount collected on the purchase price for outer burial
1599-25 containers, 110 percent of the wholesale cost of memorials
1600-26 from the amount collected on the purchase price of memorials,
1601-Page 60 1 and 100 percent of the amount collected on the purchase price
1602-2 for all cash advance items sold.
1603-3 "(b) All deposits shall be made within 30 days after
1604-4 the end of the calendar month in which the preneed contract is
1605-5 paid in full, unless, prior to that time, all liabilities of
1606-6 the seller under the preneed contract to deliver the specific
1607-7 funeral merchandise or funeral services, or both, or the
1608-8 specific cash advances, identified by the preneed provider as
1609-9 properly allocated to the payment, have been satisfied, or the
1610-10 preneed contract is validly cancelled.
1611-11 "(c) The trustee shall take title to the property
1612-12 conveyed to the trust for the purpose of investing,
1613-13 protecting, and conserving it for the certificate holder;
1614-14 collecting income; and distributing the principal and income
1615-15 as prescribed in this article chapter.
1616-16 "(d) The certificate holder is prohibited from
1617-17 sharing in the discharge of these responsibilities, except
1618-18 that the certificate holder may appoint an adviser to the
1619-19 trustee or elect tax free investments. Nothing in this chapter
1620-20 shall prohibit a trustee from electing the qualified funeral
1621-21 trust option under the Internal Revenue Code.
1622-22 "(e) The trust agreement shall be submitted to the
1623-23 commissioner board for approval and filing.
1624-24 "(f) The funds shall be held in trust, both as to
1625-25 principal and income earned thereon, and shall remain intact,
1626-26 except that the cost of the operation of the trust or trust
1627-Page 61 1 account authorized by this section may be deducted from the
1628-2 income earned thereon.
1629-3 "(g) The contract purchaser shall have no interest
1630-4 whatsoever in, or power whatsoever over, funds deposited in
1631-5 trust pursuant to this section.
1632-6 "(h) In no event may such the funds be loaned to a
1633-7 certificate holder, an affiliate of a certificate holder, or
1634-8 any person directly or indirectly engaged in the burial,
1635-9 funeral home, or cemetery business. Furthermore, the
1636-10 certificate holder's interest in the trust shall not be
1637-11 pledged as collateral for any loans, debts, or liabilities of
1638-12 the certificate holder and shall not be transferred to any
1639-13 person without the prior written approval from the
1640-14 commissioner board and the trustee. Even though the
1641-15 certificate holder shall be deemed and treated as the settlor
1642-16 and beneficiary of the trust for all purposes, all of the
1643-17 trust funds are exempt from all claims of creditors of the
1644-18 certificate holder except as to the claims of the contract
1645-19 purchaser, his or her representative, or the commissioner
1646-20 board.
1647-21 "(i) For all preneed contracts written or entered
1648-22 into on or after January 1, 2015, all required deposits in
1649-23 trust shall commence not later than 30 days after the end of
1650-24 the calendar month in which the sum of the monies collected on
1651-25 the preneed contract exceeds the amount that is not required
1652-26 to be deposited in trust as determined under subsection (a)
1653-27 unless, prior to that time, all liabilities of the preneed
1654-Page 62 1 seller under the preneed contract have been satisfied, or the
1655-2 preneed contract is validly cancelled. Further required
1656-3 deposits on the contract shall thereafter be made not later
1657-4 than 30 days after the end of the calendar month in which each
1658-5 contract payment is collected by the seller.
1659-6 "§27-17A-32. §34-13-232.
1660-7 "(a) If amounts paid by the purchaser under a
1661-8 preneed contract for funeral merchandise have previously been
1662-9 deposited in trust, the seller may withdraw the principal
1663-10 amount and trust appreciation attributable to the delivered
1664-11 item at such time as the funeral merchandise is delivered or
1665-12 installed or, if comprised of materials designed to withstand
1666-13 prolonged, protected storage without deterioration, the
1667-14 merchandise is placed in storage with a responsible third
1668-15 party bonded and insured for the wholesale value thereof and
1669-16 evidenced by a receipt specifically identifying the item, the
1670-17 specific preneed contract, the location of the item, and the
1671-18 identity and address of the bonding and insuring parties. For
1672-19 purposes of this subsection only, caskets and alternative
1673-20 containers may not be held in storage by the seller or a third
1674-21 party storage facility prior to the death of the funeral
1675-22 beneficiary.
1676-23 "(b) The trustee shall make regular valuations of
1677-24 the assets it holds in trust and provide a report of the
1678-25 valuations to the certificate holder at least quarterly. At
1679-26 all times, the certificate holder shall be able to determine
1680-27 the amount held in trust attributable to each contract holder.
1681-Page 63 1 For all contracts effective on or after January 1, 2015, the
1682-2 determination shall be based upon the fair market value of the
1683-3 trust at the time and the proportionate share of the fair
1684-4 market value attributable to each contract holder. For all
1685-5 contracts in effect before January 1, 2015, the valuation of
1686-6 each contract may be calculated using any valuation method
1687-7 that had been previously approved by the commissioner or the
1688-8 department Commissioner or the Department of Insurance before
1689-9 January 1, 2015. Any person who withdraws appreciation in the
1690-10 value of trust, other than the pro rata portion of such the
1691-11 appreciation which may be withdrawn upon the death of a
1692-12 contract's funeral beneficiary or upon cancellation of a
1693-13 preneed contract, shall be required to make additional
1694-14 deposits from his or her own funds to restore the aggregate
1695-15 value of assets to the value of funds deposited in trust, but
1696-16 excluding from the funds deposited those funds paid out upon
1697-17 preneed contracts which the person has fully performed or
1698-18 which have been otherwise withdrawn, as provided in this
1699-19 article chapter. The certificate holder shall be liable to
1700-20 third parties to the extent that income from the trust is not
1701-21 sufficient to pay the expenses of the trust.
1702-22 "(c) The trustee of the trust established pursuant
1703-23 to this article chapter shall have all of the following
1704-24 powers:
1705-25 "(1) Make investments and exercise necessary
1706-26 investment powers, provided that the commissioner board may by
1707-Page 64 1 order require the trustee to liquidate or dispose of any
1708-2 investment within 30 days after the order.
1709-3 "(2) Commingle the property of the trust with the
1710-4 property of any other preneed funeral, preneed cemetery, or
1711-5 endowment care trust established pursuant to this article
1712-6 chapter and make corresponding allocations and divisions of
1713-7 assets, liabilities, income, and expenses.
1714-8 "(d) Notwithstanding the provisions of Section
1715-9 19-3-125, the trustee may, subject to compliance with the
1716-10 requirements set forth below, may invest any portion or all of
1717-11 the funds received under preneed contracts and deposited in
1718-12 trust in life insurance contracts or annuities issued on the
1719-13 lives of preneed contract purchasers or preneed contract
1720-14 beneficiaries, hereinafter, the insured or annuitant, without
1721-15 any obligation to cover at a minimum the retail amount of the
1722-16 preneed contract at the time of purchase of the life insurance
1723-17 contracts or annuities as set forth in Section 27-17A-3
1724-18 34-13-171.
1725-19 "(1) Trust funds shall not be invested by the
1726-20 trustee in life insurance contracts or annuities unless the
1727-21 following requirements are met:
1728-22 "a. The company issuing the life insurance contracts
1729-23 or annuities is licensed by the Department of Insurance and
1730-24 the insurance producer or annuity seller is properly licensed
1731-25 within its domiciliary jurisdiction.
1732-Page 65 1 "b. Prior to the investment, the insured or
1733-2 annuitant consents, in writing, to the investment in life
1734-3 insurance contracts or annuities.
1735-4 "c. For life insurance contracts or annuities issued
1736-5 prior to May 6, 2008, and currently in force, such contracts
1737-6 shall be construed to have been an authorized investment by
1738-7 the trustee under this chapter if the insured or annuitant is
1739-8 notified in writing of the existence of any such contract and
1740-9 provided with a copy of the contract.
1741-10 "(2) Upon request, the insured or annuitant shall be
1742-11 provided with a copy of any life insurance contract or annuity
1743-12 issued to a preened trustee at no expense to the insured or
1744-13 annuitant.
1745-14 "(3) Any life insurance contract or annuity issued
1746-15 in accordance with this subsection and otherwise in compliance
1747-16 therewith shall be valid and in full force according to the
1748-17 terms and conditions thereof.
1749-18 "(4) A trustee that invests all or any portion of
1750-19 the funds received under preneed contracts and deposited in
1751-20 trust in life insurance contracts or annuities issued by one
1752-21 company licensed by the department State Department of
1753-22 Insurance shall be considered to satisfy the standards and
1754-23 requirements of Section 19-3-120.2 and Chapter 3B of Title 19.
1755-24 "(5) It is the intention of the Legislature that
1756-25 this subsection shall be retroactive and shall apply to all
1757-26 life insurance contracts or annuities issued prior to May 6,
1758-27 2008.
1759-Page 66 1 "§27-17A-33. §34-13-233.
1760-2 "(a) A purchaser, by providing written notice to the
1761-3 certificate holder, may cancel a preneed contract within 30
1762-4 days of the date that the contract was executed provided that
1763-5 the funeral merchandise and funeral services have not yet been
1764-6 used. Upon providing the notice, the purchaser shall be
1765-7 entitled to a complete refund of the amount paid, except for
1766-8 the amount allocable to any funeral merchandise or funeral
1767-9 services that have been used, and shall be released from all
1768-10 obligations under the contract. This subsection shall apply to
1769-11 all items that are purchased as part of a preneed contract.
1770-12 "(b) After 30 days from the date the preneed
1771-13 contract was executed, a purchaser, by providing written
1772-14 notice to the certificate holder, may cancel the funeral
1773-15 services, funeral merchandise, facilities, and cash advance
1774-16 items portions of a preneed contract at any time, and shall be
1775-17 entitled to the refund defined in the preneed contract
1776-18 allocable to those items. Any accumulated earnings allocable
1777-19 to the preneed contract shall be paid to the certificate
1778-20 holder upon the cancellation.
1779-21 "(c) Upon breach of contract or failure of the
1780-22 certificate holder to provide funeral merchandise or services
1781-23 under a preneed contract, the contract purchaser shall be
1782-24 entitled to a refund of 100 percent of all money paid on the
1783-25 contract. The refund shall be made within 30 days after
1784-26 receipt by the certificate holder of the contract purchaser's
1785-27 written request for refund.
1786-Page 67 1 "(d) If a purchaser is 90 days past due in making
1787-2 payments on a preneed contract, the contract shall be
1788-3 considered to be in default, and the certificate holder shall
1789-4 be entitled to cancel the contract and withdraw all funds in
1790-5 trust. Upon making the withdrawal, the certificate holder
1791-6 shall refund to the purchaser the amount defined in the
1792-7 preneed contract in the event of default of the purchaser,
1793-8 provided that the certificate holder has provided the
1794-9 purchaser with 30 days' written notice of its intention to
1795-10 exercise any of its rights under this provision.
1796-11 "(e) All preneed contracts are cancelable and
1797-12 revocable as provided in this section during the lifetime of
1798-13 the purchaser, provided that a preneed contract does not
1799-14 restrict any contract purchaser who is a qualified applicant
1800-15 for, or a recipient of, supplemental security income,
1801-16 temporary cash assistance, or Medicaid from making his or her
1802-17 contract irrevocable.
1803-18 "(f) In the event that the preneed contract is made
1804-19 irrevocable pursuant to subsection (e), the purchaser or the
1805-20 authorizing agent shall have the right to appoint a provider
1806-21 other than the seller of the preneed contract. In the event
1807-22 that a provider is appointed pursuant to this subsection, the
1808-23 seller shall transfer to the appointed provider the amount
1809-24 paid by the purchaser to the seller and those amounts
1810-25 deposited into trust, less a reasonable transfer fee
1811-26 determined by the seller board. In the event the preneed
1812-27 contract was funded by an insurance or annuity policy, the
1813-Page 68 1 seller shall cancel and relinquish any assignment of benefits
1814-2 or beneficiary status under the policy or annuity contract,
1815-3 and deliver the policy, if in the custody of the preneed
1816-4 seller, to the policy owner or his or her legal
1817-5 representative, and the seller may collect a reasonable
1818-6 transfer fee as determined by rule of the board. No transfer
1819-7 hereunder shall occur without the acceptance of the appointed
1820-8 provider.
1821-9 "(g) All refunds required to be made under this
1822-10 section to a purchaser who has canceled a contract must be
1823-11 made within 30 days after the date the written notice of
1824-12 cancellation is received by the certificate holder.
1825-13 "§27-17A-34. §34-13-234.
1826-14 "(a) Disbursement of funds discharging any preneed
1827-15 contract for funeral services or funeral merchandise fulfilled
1828-16 after May 1, 2002, shall be made by the trustee to the
1829-17 certificate holder upon receipt by the trustee of a
1830-18 certification of the certificate holder that the preneed
1831-19 contract has been performed in whole or in part or the preneed
1832-20 contract has been cancelled. Before the trustee may disburse
1833-21 any trust funds, the certificate holder shall provide to the
1834-22 trustee a death certificate or other valid proof of death, a
1835-23 letter from the preneed contract holder cancelling the preneed
1836-24 contract or valid proof the contract has been cancelled in
1837-25 accordance with Section 27-17A-33 34-13-233, or valid proof
1838-26 the merchandise has been delivered and installed, and services
1839-27 have been performed. Any trustee accepting preneed contract
1840-Page 69 1 proceeds under this article chapter may rely upon the
1841-2 certification of the certificate holder accompanied by the
1842-3 required proof, and shall not be liable to anyone for such
1843-4 reliance. If the contract is only partially performed, the
1844-5 disbursement shall only cover that portion of the contract
1845-6 performed. In the event of any contract default by the
1846-7 contract purchaser, or in the event that the funeral
1847-8 merchandise or funeral service contracted for is not provided,
1848-9 the trustee shall return, within 30 days after its receipt of
1849-10 a written request therefor, 100 percent of the funds deposited
1850-11 into the trust on the contract and the income and accretion
1851-12 thereon to the certificate holder or to its assigns, subject
1852-13 to Section 27-17A-33 34-13-233.
1853-14 "(b) For all contracts effective on or after January
1854-15 1, 2015, the amount that may be withdrawn from the trust upon
1855-16 fulfillment or cancellation of any particular preneed contract
1856-17 may not exceed the amount attributable to that preneed
1857-18 contract in proportion to the total amount held in trust for
1858-19 all preneed contracts as of the date of withdrawal. For all
1859-20 contracts in effect before January 1, 2015, the valuation of
1860-21 each contract and the amount that may be withdrawn from the
1861-22 trust may be calculated using any valuation method that had
1862-23 been approved by the commissioner or the department
1863-24 Commissioner or the Department of Insurance before January 1,
1864-25 2015."
1865-26 Section 5. Sections 27-17A-40, 27-17A-41, 27-17A-42,
1866-27 27-17A-43, 27-17A-44, 27-17A-45, 27-17A-46, 27-17A-47,
1867-Page 70 1 27-17A-48, 27-17A-49, 27-17A-50, 27-17A-51, 27-17A-52,
1868-2 27-17A-53, 27-17A-54, 27-17A-55, 27-17A-56, and 27-17A-57 of
1869-3 the Code of Alabama 1975, are amended and renumbered as
1870-4 Division 4 of Article 5 of Chapter 13 of Title 34, Code of
1871-5 Alabama 1975, to read as follows:
1872-6 "Division 4. Cemetery Merchandise and Services Trust
1687+25 revoked, and the person may not thereafter obtain a
1688+26 certificate of authority or register as a preneed sales agent.
1689+Page 63 1 "(d)(e) A person commits a Class C felony,
1690+2 punishable as provided by law, if any of the following occur:
1691+3 "(1) The person knowingly delivers to the
1692+4 commissioner board any official form, report, record, data, or
1693+5 other document required by the commissioner board containing a
1694+6 false statement or false information concerning a matter
1695+7 material to the commissioner board in the exercise of his or
1696+8 her its authority to administer and enforce this chapter.
1697+9 "(2) Incident to, or during the course of, an
1698+10 examination audit, inspection, investigation, or other inquiry
1699+11 authorized by this chapter, the person knowingly makes
1700+12 available to a representative of the commissioner board any
1701+13 official form, report, record, data, or other document
1702+14 required by the commissioner board containing a false
1703+15 statement or false information concerning a matter material to
1704+16 the purpose of the examination audit, inspection,
1705+17 investigation, or inquiry.
1706+18 "(3) With respect to the business records of a
1707+19 person engaging in, or who has at any time engaged in, the
1708+20 sale of a preneed contract, a person, with a purpose to use
1709+21 deception as defined in subdivision (1) of Section 13A-8-1,
1710+22 makes false entries in such the records or alters, erases,
1711+23 obliterates, deletes, or removes a correct entry in such the
1712+24 records, fails to make a correct entry in such the records, or
1713+25 prevents the making of a correct entry, or causes the omission
1714+26 of a correct entry in such the records.
1715+Page 64 1 "(e)(f) Except as otherwise provided in this section
1716+2 chapter, the willful violation of this chapter is a Class A
1717+3 misdemeanor, punishable as provided by law.
1718+4 "(f) The duties and authority of the insurance fraud
1719+5 unit created under Section 27-12A-40, including the powers of
1720+6 the unit's investigators, shall extend to investigations into
1721+7 violations of this section.
1722+8 "(g) In addition to the powers conferred by this
1723+9 chapter and the fines specified in Chapter 30 of Title 8, or
1724+10 otherwise provided by this chapter, the board may levy a fine,
1725+11 not to exceed two thousand five hundred dollars ($2,500), for
1726+12 each separate violation of this chapter or rule of the board.
1727+13 "§27-17A-23.§34-13-204.
1728+14 "The commissioner board, the Attorney General, or
1729+15 any person may bring a civil action against a person or
1730+16 company violating this chapter or rule of the board in
1731+17 Montgomery County or the appropriate court of the county in
1732+18 which the alleged violator resides or has his or her or its
1733+19 principal place of business or in the county wherein the
1734+20 alleged violation occurred. Upon adverse adjudication, the
1735+21 defendant shall be liable for actual damages caused by the
1736+22 violation. The court, as provided by common law, may award
1737+23 punitive damages and may provide equitable relief as it deems
1738+24 proper or necessary, including enjoining the defendant from
1739+25 further violation of this chapter or rule of the board.
1740+26 "§27-17A-24.§34-13-205.
1741+Page 65 1 The provisions of this chapter are cumulative to
1742+2 rights under the general civil and common law, and no action
1743+3 of the commissioner board may abrogate the rights to damages
1744+4 or other relief in any court.
1745+5 "§27-17A-25.§34-13-206.
1746+6 "(a) All fees collected by the commissioner board
1747+7 pursuant to this chapter shall be deposited into the State
1748+8 Treasury to the credit of the Insurance Department Fund
1749+9 Alabama State Funeral Service Fund.
1750+10 "(b) All fines collected by the commissioner board
1751+11 pursuant to this chapter shall be deposited into the State
1752+12 Treasury to the credit of the State General Fund Alabama State
1753+13 Funeral Service Fund.
1754+14 "(c) The commissioner board may use funds available
1755+15 from any source including, but not limited to, grants,
1756+16 appropriations, and gifts, for any purpose in the enforcement
1757+17 of this chapter."
1758+18 Section 4. Sections 27-17A-30, 27-17A-31, 27-17A-32,
1759+19 27-17A-33, and 27-17A-34 of the Code of Alabama 1975, are
1760+20 amended and renumbered as Division 3 of Article 5 of Chapter
1761+21 13 of Title 34, Code of Alabama 1975, to read as follows:
1762+22 "Division 3. Funeral Merchandise and Services Trust
1763+23 Fund.
1764+24 "§27-17A-30.§34-13-230.
1765+25 "To comply with the trust requirement of subsection
1766+26 (a) of Section 27-17A-13 34-13-194, all certificate holders
1767+Page 66 1 providing preneed contracts for funeral services or funeral
1768+2 merchandise shall be subject to this article chapter.
1769+3 "§27-17A-31.§34-13-231.
1770+4 "(a) Any person who is paid, collects, or receives
1771+5 funds under a preneed contract for funeral services or funeral
1772+6 merchandise to be funded by trust shall deposit in trust an
1773+7 amount at least equal to the sum of 75 percent of the amount
1774+8 collected on the purchase price for all funeral services and
1775+9 funeral merchandise sold, transportation, and facilities
1776+10 rented other than outer burial containers, 60 percent of the
1777+11 amount collected on the purchase price for outer burial
1778+12 containers, 110 percent of the wholesale cost of memorials
1779+13 from the amount collected on the purchase price of memorials,
1780+14 and 100 percent of the amount collected on the purchase price
1781+15 for all cash advance items sold.
1782+16 "(b) All deposits shall be made within 30 days after
1783+17 the end of the calendar month in which the preneed contract is
1784+18 paid in full, unless, prior to that time, all liabilities of
1785+19 the seller under the preneed contract to deliver the specific
1786+20 funeral merchandise or funeral services, or both, or the
1787+21 specific cash advances, identified by the preneed provider as
1788+22 properly allocated to the payment, have been satisfied, or the
1789+23 preneed contract is validly cancelled.
1790+24 "(c) The trustee shall take title to the property
1791+25 conveyed to the trust for the purpose of investing,
1792+26 protecting, and conserving it for the certificate holder;
1793+Page 67 1 collecting income; and distributing the principal and income
1794+2 as prescribed in this article chapter.
1795+3 "(d) The certificate holder is prohibited from
1796+4 sharing in the discharge of these responsibilities, except
1797+5 that the certificate holder may appoint an adviser to the
1798+6 trustee or elect tax free investments. Nothing in this chapter
1799+7 shall prohibit a trustee from electing the qualified funeral
1800+8 trust option under the Internal Revenue Code.
1801+9 "(e) The trust agreement shall be submitted to the
1802+10 commissioner board for approval and filing.
1803+11 "(f) The funds shall be held in trust, both as to
1804+12 principal and income earned thereon, and shall remain intact,
1805+13 except that the cost of the operation of the trust or trust
1806+14 account authorized by this section may be deducted from the
1807+15 income earned thereon.
1808+16 "(g) The contract purchaser shall have no interest
1809+17 whatsoever in, or power whatsoever over, funds deposited in
1810+18 trust pursuant to this section.
1811+19 "(h) In no event may such the funds be loaned to a
1812+20 certificate holder, an affiliate of a certificate holder, or
1813+21 any person directly or indirectly engaged in the burial,
1814+22 funeral home, or cemetery business. Furthermore, the
1815+23 certificate holder's interest in the trust shall not be
1816+24 pledged as collateral for any loans, debts, or liabilities of
1817+25 the certificate holder and shall not be transferred to any
1818+26 person without the prior written approval from the
1819+27 commissioner board and the trustee. Even though the
1820+Page 68 1 certificate holder shall be deemed and treated as the settlor
1821+2 and beneficiary of the trust for all purposes, all of the
1822+3 trust funds are exempt from all claims of creditors of the
1823+4 certificate holder except as to the claims of the contract
1824+5 purchaser, his or her representative, or the commissioner
1825+6 board.
1826+7 "(i) For all preneed contracts written or entered
1827+8 into on or after January 1, 2015, all required deposits in
1828+9 trust shall commence not later than 30 days after the end of
1829+10 the calendar month in which the sum of the monies collected on
1830+11 the preneed contract exceeds the amount that is not required
1831+12 to be deposited in trust as determined under subsection (a)
1832+13 unless, prior to that time, all liabilities of the preneed
1833+14 seller under the preneed contract have been satisfied, or the
1834+15 preneed contract is validly cancelled. Further required
1835+16 deposits on the contract shall thereafter be made not later
1836+17 than 30 days after the end of the calendar month in which each
1837+18 contract payment is collected by the seller.
1838+19 "§27-17A-32.§34-13-232.
1839+20 "(a) If amounts paid by the purchaser under a
1840+21 preneed contract for funeral merchandise have previously been
1841+22 deposited in trust, the seller may withdraw the principal
1842+23 amount and trust appreciation attributable to the delivered
1843+24 item at such time as the funeral merchandise is delivered or
1844+25 installed or, if comprised of materials designed to withstand
1845+26 prolonged, protected storage without deterioration, the
1846+27 merchandise is placed in storage with a responsible third
1847+Page 69 1 party bonded and insured for the wholesale value thereof and
1848+2 evidenced by a receipt specifically identifying the item, the
1849+3 specific preneed contract, the location of the item, and the
1850+4 identity and address of the bonding and insuring parties. For
1851+5 purposes of this subsection only, caskets and alternative
1852+6 containers may not be held in storage by the seller or a third
1853+7 party storage facility prior to the death of the funeral
1854+8 beneficiary.
1855+9 "(b) The trustee shall make regular valuations of
1856+10 the assets it holds in trust and provide a report of the
1857+11 valuations to the certificate holder at least quarterly. At
1858+12 all times, the certificate holder shall be able to determine
1859+13 the amount held in trust attributable to each contract holder.
1860+14 For all contracts effective on or after January 1, 2015, the
1861+15 determination shall be based upon the fair market value of the
1862+16 trust at the time and the proportionate share of the fair
1863+17 market value attributable to each contract holder. For all
1864+18 contracts in effect before January 1, 2015, the valuation of
1865+19 each contract may be calculated using any valuation method
1866+20 that had been previously approved by the commissioner or the
1867+21 department Commissioner or the Department of Insurance before
1868+22 January 1, 2015. Any person who withdraws appreciation in the
1869+23 value of trust, other than the pro rata portion of such the
1870+24 appreciation which may be withdrawn upon the death of a
1871+25 contract's funeral beneficiary or upon cancellation of a
1872+26 preneed contract, shall be required to make additional
1873+27 deposits from his or her own funds to restore the aggregate
1874+Page 70 1 value of assets to the value of funds deposited in trust, but
1875+2 excluding from the funds deposited those funds paid out upon
1876+3 preneed contracts which the person has fully performed or
1877+4 which have been otherwise withdrawn, as provided in this
1878+5 article chapter. The certificate holder shall be liable to
1879+6 third parties to the extent that income from the trust is not
1880+7 sufficient to pay the expenses of the trust.
1881+8 "(c) The trustee of the trust established pursuant
1882+9 to this article chapter shall have all of the following
1883+10 powers:
1884+11 "(1) Make investments and exercise necessary
1885+12 investment powers, provided that the commissioner board may by
1886+13 order require the trustee to liquidate or dispose of any
1887+14 investment within 30 days after the order.
1888+15 "(2) Commingle the property of the trust with the
1889+16 property of any other preneed funeral, preneed cemetery, or
1890+17 endowment care trust established pursuant to this article
1891+18 chapter and make corresponding allocations and divisions of
1892+19 assets, liabilities, income, and expenses.
1893+20 "(d) Notwithstanding the provisions of Section
1894+21 19-3-125, the trustee may, subject to compliance with the
1895+22 requirements set forth below, may invest any portion or all of
1896+23 the funds received under preneed contracts and deposited in
1897+24 trust in life insurance contracts or annuities issued on the
1898+25 lives of preneed contract purchasers or preneed contract
1899+26 beneficiaries, hereinafter, the insured or annuitant, without
1900+27 any obligation to cover at a minimum the retail amount of the
1901+Page 71 1 preneed contract at the time of purchase of the life insurance
1902+2 contracts or annuities as set forth in Section 27-17A-3
1903+3 34-13-171.
1904+4 "(1) Trust funds shall not be invested by the
1905+5 trustee in life insurance contracts or annuities unless the
1906+6 following requirements are met:
1907+7 "a. The company issuing the life insurance contracts
1908+8 or annuities is licensed by the Department of Insurance and
1909+9 the insurance producer or annuity seller is properly licensed
1910+10 within its domiciliary jurisdiction.
1911+11 "b. Prior to the investment, the insured or
1912+12 annuitant consents, in writing, to the investment in life
1913+13 insurance contracts or annuities.
1914+14 "c. For life insurance contracts or annuities issued
1915+15 prior to May 6, 2008, and currently in force, such contracts
1916+16 shall be construed to have been an authorized investment by
1917+17 the trustee under this chapter if the insured or annuitant is
1918+18 notified in writing of the existence of any such contract and
1919+19 provided with a copy of the contract.
1920+20 "(2) Upon request, the insured or annuitant shall be
1921+21 provided with a copy of any life insurance contract or annuity
1922+22 issued to a preened trustee at no expense to the insured or
1923+23 annuitant.
1924+24 "(3) Any life insurance contract or annuity issued
1925+25 in accordance with this subsection and otherwise in compliance
1926+26 therewith shall be valid and in full force according to the
1927+27 terms and conditions thereof.
1928+Page 72 1 "(4) A trustee that invests all or any portion of
1929+2 the funds received under preneed contracts and deposited in
1930+3 trust in life insurance contracts or annuities issued by one
1931+4 company licensed by the department State Department of
1932+5 Insurance shall be considered to satisfy the standards and
1933+6 requirements of Section 19-3-120.2 and Chapter 3B of Title 19.
1934+7 "(5) It is the intention of the Legislature that
1935+8 this subsection shall be retroactive and shall apply to all
1936+9 life insurance contracts or annuities issued prior to May 6,
1937+10 2008.
1938+11 "§27-17A-33.§34-13-233.
1939+12 "(a) A purchaser, by providing written notice to the
1940+13 certificate holder, may cancel a preneed contract within 30
1941+14 days of the date that the contract was executed provided that
1942+15 the funeral merchandise and funeral services have not yet been
1943+16 used. Upon providing the notice, the purchaser shall be
1944+17 entitled to a complete refund of the amount paid, except for
1945+18 the amount allocable to any funeral merchandise or funeral
1946+19 services that have been used, and shall be released from all
1947+20 obligations under the contract. This subsection shall apply to
1948+21 all items that are purchased as part of a preneed contract.
1949+22 "(b) After 30 days from the date the preneed
1950+23 contract was executed, a purchaser, by providing written
1951+24 notice to the certificate holder, may cancel the funeral
1952+25 services, funeral merchandise, facilities, and cash advance
1953+26 items portions of a preneed contract at any time, and shall be
1954+27 entitled to the refund defined in the preneed contract
1955+Page 73 1 allocable to those items. Any accumulated earnings allocable
1956+2 to the preneed contract shall be paid to the certificate
1957+3 holder upon the cancellation.
1958+4 "(c) Upon breach of contract or failure of the
1959+5 certificate holder to provide funeral merchandise or services
1960+6 under a preneed contract, the contract purchaser shall be
1961+7 entitled to a refund of 100 percent of all money paid on the
1962+8 contract. The refund shall be made within 30 days after
1963+9 receipt by the certificate holder of the contract purchaser's
1964+10 written request for refund.
1965+11 "(d) If a purchaser is 90 days past due in making
1966+12 payments on a preneed contract, the contract shall be
1967+13 considered to be in default, and the certificate holder shall
1968+14 be entitled to cancel the contract and withdraw all funds in
1969+15 trust. Upon making the withdrawal, the certificate holder
1970+16 shall refund to the purchaser the amount defined in the
1971+17 preneed contract in the event of default of the purchaser,
1972+18 provided that the certificate holder has provided the
1973+19 purchaser with 30 days' written notice of its intention to
1974+20 exercise any of its rights under this provision.
1975+21 "(e) All preneed contracts are cancelable and
1976+22 revocable as provided in this section during the lifetime of
1977+23 the purchaser, provided that a preneed contract does not
1978+24 restrict any contract purchaser who is a qualified applicant
1979+25 for, or a recipient of, supplemental security income,
1980+26 temporary cash assistance, or Medicaid from making his or her
1981+27 contract irrevocable.
1982+Page 74 1 "(f) In the event that the preneed contract is made
1983+2 irrevocable pursuant to subsection (e), the purchaser or the
1984+3 authorizing agent shall have the right to appoint a provider
1985+4 other than the seller of the preneed contract. In the event
1986+5 that a provider is appointed pursuant to this subsection, the
1987+6 seller shall transfer to the appointed provider the amount
1988+7 paid by the purchaser to the seller and those amounts
1989+8 deposited into trust, less a reasonable transfer fee
1990+9 determined by the seller board. In the event the preneed
1991+10 contract was funded by insurance or annuity policy the seller
1992+11 shall cancel and relinquish any assignment of benefits or
1993+12 beneficiary status under the policy or annuity contract, and
1994+13 deliver the policy, if in the custody of the preneed seller,
1995+14 to the policy owner or his or her legal representative, and
1996+15 the seller may collect a reasonable transfer fee as determined
1997+16 by rule of the board. No transfer hereunder shall occur
1998+17 without the acceptance of the appointed provider.
1999+18 "(g) All refunds required to be made under this
2000+19 section to a purchaser who has canceled a contract must be
2001+20 made within 30 days after the date the written notice of
2002+21 cancellation is received by the certificate holder.
2003+22 "§27-17A-34.§34-13-234.
2004+23 "(a) Disbursement of funds discharging any preneed
2005+24 contract for funeral services or funeral merchandise fulfilled
2006+25 after May 1, 2002, shall be made by the trustee to the
2007+26 certificate holder upon receipt by the trustee of a
2008+27 certification of the certificate holder that the preneed
2009+Page 75 1 contract has been performed in whole or in part or the preneed
2010+2 contract has been cancelled. Before the trustee may disburse
2011+3 any trust funds, the certificate holder shall provide to the
2012+4 trustee a death certificate or other valid proof of death, a
2013+5 letter from the preneed contract holder cancelling the preneed
2014+6 contract or valid proof the contract has been cancelled in
2015+7 accordance with Section 27-17A-33 34-13-233, or valid proof
2016+8 the merchandise has been delivered and installed, and services
2017+9 have been performed. Any trustee accepting preneed contract
2018+10 proceeds under this article chapter may rely upon the
2019+11 certification of the certificate holder accompanied by the
2020+12 required proof, and shall not be liable to anyone for such
2021+13 reliance. If the contract is only partially performed, the
2022+14 disbursement shall only cover that portion of the contract
2023+15 performed. In the event of any contract default by the
2024+16 contract purchaser, or in the event that the funeral
2025+17 merchandise or funeral service contracted for is not provided,
2026+18 the trustee shall return, within 30 days after its receipt of
2027+19 a written request therefor, 100 percent of the funds deposited
2028+20 into the trust on the contract and the income and accretion
2029+21 thereon to the certificate holder or to its assigns, subject
2030+22 to Section 27-17A-33 34-13-233.
2031+23 "(b) For all contracts effective on or after January
2032+24 1, 2015, the amount that may be withdrawn from the trust upon
2033+25 fulfillment or cancellation of any particular preneed contract
2034+26 may not exceed the amount attributable to that preneed
2035+27 contract in proportion to the total amount held in trust for
2036+Page 76 1 all preneed contracts as of the date of withdrawal. For all
2037+2 contracts in effect before January 1, 2015, the valuation of
2038+3 each contract and the amount that may be withdrawn from the
2039+4 trust may be calculated using any valuation method that had
2040+5 been approved by the commissioner or the department
2041+6 Commissioner or the Department of Insurance before January 1,
2042+7 2015."
2043+8 Section 5. Sections 27-17A-40, 27-17A-41, 27-17A-42,
2044+9 27-17A-43, 27-17A-44, 27-17A-45, 27-17A-46, 27-17A-47,
2045+10 27-17A-48, 27-17A-49, 27-17A-50, 27-17A-51, 27-17A-52,
2046+11 27-17A-53, 27-17A-54, 27-17A-55, 27-17A-56, and 27-17A-57
2047+12 of the Code of Alabama 1975, are amended and renumbered as
2048+13 Division 4 of Article 5 of Chapter 13 of Title 34, Code of
2049+14 Alabama 1975, to read as follows:
2050+15 "Division 4. Cemetery Merchandise and Services Trust
2051+16 Fund.
2052+17 "§27-17A-40.§34-13-260.
2053+18 "To comply with the trust requirement of subsection
2054+19 (a) of Section 27-17A-13 34-13-194, all certificate holders
2055+20 who are cemetery authorities providing preneed contracts for
2056+21 cemetery services or cemetery merchandise shall be subject to
2057+22 this article chapter.
2058+23 "§27-17A-41.§34-13-261.
2059+24 "(a) Any person who receives or collects any funds
2060+25 on account of a preneed contract in this state for cemetery
2061+26 services or cemetery merchandise, or both, entered into after
2062+27 May 1, 2002, shall have the obligation to pay over and
2063+Page 77 1 contribute into a trust fund as hereinafter described, those
2064+2 amounts or proportions of the funds as hereinafter provided.
2065+3 "(b) Whether or not the preneed contract provides
2066+4 for cemetery merchandise or cemetery services, or any
2067+5 combination thereof, the trust fund shall be referred to in
2068+6 this section as the Cemetery Merchandise and Services Trust
18732069 7 Fund.
1874-8 "§27-17A-40. §34-13-260.
1875-9 "To comply with the trust requirement of subsection
1876-10 (a) of Section 27-17A-13 34-13-194, all certificate holders
1877-11 who are cemetery authorities providing preneed contracts for
1878-12 cemetery services or cemetery merchandise shall be subject to
1879-13 this article chapter.
1880-14 "§27-17A-41. §34-13-261.
1881-15 "(a) Any person who receives or collects any funds
1882-16 on account of a preneed contract in this state for cemetery
1883-17 services or cemetery merchandise, or both, entered into after
1884-18 May 1, 2002, shall have the obligation to pay over and
1885-19 contribute into a trust fund as hereinafter described, those
1886-20 amounts or proportions of the funds as hereinafter provided.
1887-21 "(b) Whether or not the preneed contract provides
1888-22 for cemetery merchandise or cemetery services, or any
1889-23 combination thereof, the trust fund shall be referred to in
1890-24 this section as the Cemetery Merchandise and Services Trust
1891-25 Fund.
1892-Page 71 1 "(c) The trustee of the Cemetery Merchandise and
1893-2 Services Trust Fund shall be qualified as such within the
1894-3 definition of the trustee.
1895-4 "(d) The trustee shall take title to the property
1896-5 conveyed to the Cemetery Merchandise and Services Trust Fund
1897-6 subject to this section.
1898-7 "(e) The contract purchaser shall have no interest
1899-8 whatsoever in, or power whatsoever over, the funds deposited
1900-9 in the Cemetery Merchandise and Services Trust Fund.
1901-10 "(f) The party contracting to deliver the cemetery
1902-11 merchandise or cemetery services or cash advances, whether or
1903-12 not a preneed provider, shall be referred to in this section
1904-13 as the "seller."
1905-14 "(g) The seller shall be the beneficiary of the
1906-15 Cemetery Merchandise and Services Trust Fund.
1907-16 "§27-17A-42. §34-13-262.
1908-17 "(a) The obligation of the seller under a preneed
1909-18 contract shall be to make contributions into the Cemetery
1910-19 Merchandise and Services Trust Fund in accordance with the
1911-20 following formulae:
1912-21 "(1) With respect to all cemetery merchandise, 110
1913-22 percent of wholesale cost.
1914-23 "(2) With respect to outer burial containers, 60
1915-24 percent of the purchase price specified in the preneed
1916-25 contract.
1917-26 "(3) With respect to cemetery services, 60 percent
1918-27 of the purchase price specified in the preneed contract.
1919-Page 72 1 "(4) With respect to all cash advance items sold,
1920-2 100 percent of the purchase price specified for the same in
1921-3 the preneed contract.
1922-4 "(5) With respect to caskets, 75 percent of the
1923-5 purchase price.
1924-6 "(b) All contributions shall be made within 30 days
1925-7 after the end of the calendar month in which the preneed
1926-8 contract is paid in full, unless, prior to that time, all
1927-9 liabilities of the seller under the preneed contract to
1928-10 deliver the specific cemetery merchandise or cemetery
1929-11 services, or both, or the specific cash advances, identified
1930-12 by the preneed provider as properly allocated to the payment,
1931-13 have been satisfied, or the preneed contract is validly
1932-14 cancelled.
1933-15 "(c) For all preneed contracts entered into on or
1934-16 after January 1, 2015, all contributions shall be made not
1935-17 later than 30 days after the end of the calendar month in
1936-18 which the sum of the monies collected on the preneed contract
1937-19 exceeds the amount that is not required to be contributed as
1938-20 determined under subsection (a), unless, prior to that time,
1939-21 all liabilities of the seller under the preneed contract have
1940-22 been satisfied, or the preneed contract is validly cancelled.
1941-23 Further required trust contributions on the contract shall
1942-24 thereafter be made not later than 30 days after the end of the
1943-25 calendar month in which each contract payment is collected by
1944-26 the seller.
1945-Page 73 1 "(d) The trustee shall invest and reinvest the
1946-2 Cemetery Merchandise and Services Trust Fund.
1947-3 "(e) The trustee shall make regular evaluations of
1948-4 the fair market value of assets held in and liabilities, if
1949-5 any, of the Cemetery Merchandise and Services Trust Fund and
1950-6 provide a report of the evaluations to the seller at least
1951-7 quarterly. Upon receipt of each quarterly report, the seller
1952-8 may submit to the trustee a written and detailed analysis
1953-9 concerning the balance of funds in the Cemetery Merchandise
1954-10 and Services Trust Fund, certified under oath as being true
1955-11 and correct upon information and belief by a responsible
1956-12 officer of the seller.
1957-13 "(f) While the obligation of the seller to make
1958-14 contributions to the Cemetery Merchandise and Services Trust
1959-15 Fund is set forth in this section, the obligation of the
1960-16 seller at the time of making certain withdrawals from the
1961-17 Cemetery Merchandise and Services Trust Fund as herein
1962-18 provided for shall be calculated with respect to the current
1963-19 wholesale cost of cemetery merchandise and current retail
1964-20 price of cemetery services and cash advances at the time of
1965-21 withdrawal. If the fair market value as reported by the
1966-22 trustee exceeds 110 percent of the total of the following, the
1967-23 seller shall be entitled to withdraw and retain from the
1968-24 merchandise trust fund, the excess funds therein: 110 percent
1969-25 of the current wholesale cost of the liability to deliver all
1970-26 cemetery merchandise, 60 percent of the current retail price
1971-27 for all cemetery services, 60 percent of the current retail
1972-Page 74 1 price of outer burial containers, 75 percent of the current
1973-2 retail price of caskets, and 100 percent of the current retail
1974-3 price of all cash advances, for the total of all preneed
1975-4 contracts for which the purchasers have paid in full, all
1976-5 calculated as of the time of withdrawal; and concerning the
1977-6 total of all preneed contracts for which the purchasers have
1978-7 not paid in full, 25 percent of the total of the following:
1979-8 110 percent of the current wholesale cost of the liability to
1980-9 deliver all cemetery merchandise, 60 percent of the current
1981-10 retail price for all cemetery services, and 100 percent of the
1982-11 current retail price of all cash advances, all calculated as
1983-12 of the time of withdrawal.
1984-13 "(g) At least annually the seller shall make the
1985-14 aforesaid analysis and certification and provide the same to
1986-15 the trustee. If the certification discloses that the fair
1987-16 market value of the Cemetery Merchandise and Services Trust
1988-17 Fund is less than 100 percent of the aggregate calculated
1989-18 amount the seller shall from its own funds contribute to the
1990-19 Cemetery Merchandise and Services Trust Fund within the 12
1991-20 months succeeding the annual computation the amount necessary
1992-21 to restore the trust fund to an amount equal to not less than
1993-22 100 percent of the aggregate amount so calculated.
1994-23 "§27-17A-43. §34-13-263.
1995-24 "(a) Upon cancellation of a preneed contract by
1996-25 mutual agreement between the seller and purchaser, or upon
1997-26 unilateral cancellation of a preneed contract by the seller by
1998-27 reason of default on the part of the purchaser, or other valid
1999-Page 75 1 cancellation by reason of transfers to another seller or
2000-2 otherwise, the seller may, upon submission of a certification
2001-3 under oath by a responsible officer of the seller to the
2002-4 trustee, may withdraw from the Cemetery Merchandise and
2003-5 Services Trust Fund and retain an amount equal to the amount
2004-6 of all funds contributed to the trust fund with respect to the
2005-7 preneed contract. Any trustee accepting preneed contract
2006-8 proceeds under this article chapter may rely on the seller's
2007-9 certification under oath as required herein to be made, and
2008-10 shall not be liable to anyone for such reliance.
2009-11 "(b) At such time as the seller undertakes to
2010-12 perform its obligations under a preneed contract by delivery
2011-13 or installation, or both, of cemetery merchandise and the
2012-14 provision of cemetery services and disbursement on account of
2013-15 cash advances, or otherwise, upon certification to the trustee
2014-16 under oath by a responsible officer of the seller that the
2015-17 obligations of the seller under the contract have been
2016-18 completely fulfilled, the seller may withdraw from the
2017-19 Cemetery Merchandise and Services Trust Fund and retain an
2018-20 amount equal to the current wholesale cost to the fund with
2019-21 respect to the preneed contract.
2020-22 "(c) At such time as the seller has fulfilled all of
2021-23 its obligations under all preneed contracts with respect to
2022-24 which funds have been contributed to the trust fund, and
2023-25 certification under oath to the trustee by a responsible
2024-26 officer of the seller of those facts, the seller may withdraw
2025-Page 76 1 from the trust fund and retain all of the remaining assets
2026-2 thereof.
2027-3 "§27-17A-44. §34-13-264.
2028-4 "If the amounts paid by the purchaser under a
2029-5 preneed contract for cemetery merchandise have previously been
2030-6 deposited in trust, the seller may withdraw the principal
2031-7 amount there, at such time as the cemetery merchandise is
2032-8 delivered or installed or, if comprised of materials designed
2033-9 to withstand prolonged, protected storage without
2034-10 deterioration, the merchandise is placed in storage with a
2035-11 responsible third party bonded and insured for the wholesale
2036-12 value thereof and evidenced by a receipt specifically
2037-13 identifying the item, the specific preneed contract, the
2038-14 location of the item, and the identity and address of the
2039-15 bonding and insuring parties. For purposes of this section
2040-16 only, caskets and alternative containers may not be held in
2041-17 storage by the seller or a third party storage facility prior
2042-18 to the death of the funeral beneficiary.
2043-19 "§27-17A-45. §34-13-265.
2044-20 "An endowment care fund and all payments or
2045-21 contributions to it are expressly permitted as and for
2046-22 charitable and eleemosynary purposes. No payment, gift, grant,
2047-23 bequest, or other contribution for endowment care is invalid
2048-24 by reason of any indefiniteness or uncertainty of the persons
2049-25 designated as beneficiaries in the instruments creating the
2050-26 fund, nor is the fund or any contributions to it invalid as
2051-Page 77 1 violating any law against perpetuities, or the suspension of
2052-2 the power of alienation of title to property.
2053-3 "§27-17A-46. §34-13-266.
2054-4 "Any cemetery now existing or hereafter established,
2055-5 excluding those operated by governmental agencies or religious
2056-6 institutions, shall be may be qualified as an endowment care
2057-7 cemetery, except those cemeteries which do not charge fees or
2058-8 sell plots, interment rights, or any related cemetery
2059-9 merchandise.
2060-10 "§27-17A-47. §34-13-267.
2061-11 "(a) Every cemetery authority operating an endowment
2062-12 care cemetery shall establish an endowment care fund which
2063-13 shall be placed with and held by a bank, trust company,
2064-14 savings and loan association, or other financial institution
2065-15 authorized to provide trust services under Title 5, as
2066-16 amended, or under the applicable laws of the United States or
2067-17 any other state, or a board of trustees, consisting of at
2068-18 least three members, who shall reside in the State of Alabama,
2069-19 one of whom is engaged in outside cemetery management, and
2070-20 each of whom shall be bonded to honestly perform the duties of
2071-21 trustee under a formal trust agreement.
2072-22 "(b) Except as specifically provided in this
2073-23 subsection, commencing on July 1, 2014, a person serving on a
2074-24 board of trustees or cemetery authority may not also serve as
2075-25 a trustee of an endowment care fund for the cemetery
2076-26 authority. A board of trustees in existence on July 1, 2014,
2077-27 may continue to serve as the trustee of an endowment care fund
2078-Page 78 1 if the board of trustees otherwise complies with this
2079-2 subsection. Unless exempted by the commissioner board pursuant
2080-3 to this subsection, on or before January 1, 2015, each member
2081-4 of a board of trustees in existence on July 1, 2014, shall
2082-5 furnish the bond required by subsection (a) in the greater of
2083-6 one hundred thousand dollars ($100,000) or the amount in each
2084-7 endowment care fund for which the board of trustees acts as
2085-8 trustee as of December 31, 2014. Thereafter, the amount of the
2086-9 bonds shall be increased on January 1 of each succeeding year
2087-10 to equal the amount in each endowment care fund as of the
2088-11 immediately preceding December 31. The commissioner board
2089-12 shall exempt a board of trustees from the bond requirement if
2090-13 the board of trustees provides to the commissioner board an
2091-14 annual audit report that satisfies all of the following
2092-15 criteria:
2093-16 "(1) The report is prepared by a certified public
2094-17 accountant authorized to practice in Alabama.
2095-18 "(2) The report evidences that the review made the
2096-19 subject of the report by the accountant encompasses each
2097-20 endowment care fund for which the board of trustees acts as
2098-21 trustee.
2099-22 "(3) The report notes relating to the endowment care
2100-23 fund or funds are in a form that is reasonably acceptable to
2101-24 the commissioner board.
2102-25 "(4) The report does not evidence any material
2103-26 violation of or noncompliance with this chapter relating to an
2104-27 endowment care fund.
2105-Page 79 1 "(c) The corporate trustee or board of trustees
2106-2 shall be referred to as a qualified trustee. Unless otherwise
2107-3 specified in this article chapter or in the terms of the trust
2108-4 instrument, the trustee of any trust established under or
2109-5 pursuant to this article chapter shall have all powers granted
2110-6 to trustees under Article 14 of Chapter 3 of Title 19. The
2111-7 incorporation herein of such powers shall not be deemed to
2112-8 imply any duties of trustees of trusts established under or
2113-9 pursuant to this article chapter not expressly delineated in
2114-10 this article chapter.
2115-11 "(d) The cemetery authority may employ a person to
2116-12 advise the trustee in the management of the fund.
2117-13 "(e) The cemetery authority may enter into a
2118-14 contract with the qualified trustee for the management and
2119-15 investment of the endowment care fund, which contract may
2120-16 provide for the payment of income from the fund of reasonable
2121-17 fees or commissions to the trustee, and its reasonable
2122-18 expenses for administering the trust.
2123-19 "(f) As often as he or she the board may deem
2124-20 necessary, the commissioner board may examine audit the
2125-21 records or facilities, or both, of any cemetery authority
2126-22 operating an endowment care cemetery.
2127-23 "§27-17A-48. §34-13-268.
2128-24 "(a) Each cemetery authority shall comply with this
2129-25 chapter and maintain at each place of business a list of the
2130-26 names and addresses of its owners and directors, which shall
2131-27 be available to the public.
2132-Page 80 1 "(b) Each cemetery authority shall maintain a record
2133-2 of all property interment space owners by name and last known
2134-3 address with a description of merchandise and location of
2135-4 burial lots, crypts, or niches and the records shall be on a
2136-5 form or in a format prescribed by the board and shall detail
2137-6 all information required by the board. A plat map shall be
2138-7 maintained for each cemetery location at the cemetery business
2139-8 office. A book or file shall be kept as to the date, location
2140-9 by lot, and space number of each person interred or entombed
2141-10 in the cemetery. A written copy of the cemetery rules and
2142-11 regulations shall be maintained at each location and made
2143-12 available to the public upon request.
2144-13 "§27-17A-49. §34-13-269.
2145-14 "(a) From the sale price of each plot, crypt, or
2146-15 niche sold by the cemetery authority, of an endowment care
2147-16 cemetery, it shall pay an amount, not less than as determined
2148-17 in accordance with the following schedule, to the trustee of
2149-18 the endowment care fund, which payment shall be paid over to
2150-19 the trustee not more than four months after the close of the
2151-20 month in which the total or final payment on the sale has been
2152-21 received:
2153-22 "(1) Fifteen percent of the sale price of each grave
2154-23 or lawn crypt space.
2155-24 "(2) Five percent of the sale price of each
2156-25 mausoleum crypt or niche.
2157-26 "(3) The amount received for special care funds,
2158-27 gifts, grants, contribution devises, or bequests made with
2159-Page 81 1 respect to the separate or special care of a particular lot,
2160-2 grave, crypt, niche, mausoleum, monument, or marker or that of
2161-3 a particular family, as distinguished from the general endowed
2162-4 care of a cemetery or of a garden.
2163-5 "(b) In addition to subsection (a), a cemetery
2164-6 authority may receive, and transfer to the trustee, as a part
2165-7 of or incident to the endowment care fund, any property, real,
2166-8 personal, or mixed, bequeathed, devised, given, or otherwise
2167-9 contributed to it for endowment care purposes. Any contractual
2168-10 endowment care deposits shall fall under this article chapter.
2169-11 "(c) Any cemetery authority which is organized and
2170-12 engaged in business prior to May 1, 2002, shall qualify as an
2171-13 endowment care cemetery if the following occur:
2172-14 "(1) Not already placed, it shall within 90 days of
2173-15 May 1, 2002, have placed the entire principal of any endowment
2174-16 care fund in its possession, custody, or control, into the
2175-17 hands of a qualified trustee designated by it, to be
2176-18 administered as set forth in this article chapter; and
2177-19 principal of its endowment care fund, or the aggregate
2178-20 principal of its endowment care funds, if more than one, shall
2179-21 have a fair market value on either May 1, 2002, or on the date
2180-22 of transfer to the trustee of not less than twenty-five
2181-23 thousand dollars ($25,000); or it shall substitute 25 percent
2182-24 for each percentage of each sale for the next five years or
2183-25 five thousand dollars ($5,000) per year, whichever is greater,
2184-26 until the balance of twenty-five thousand dollars ($25,000) is
2185-27 reached. In such case, the entire amount of twenty-five
2186-Page 82 1 thousand dollars ($25,000) shall be paid into the fund before
2187-2 the end of the fifth year, and no interest may be removed from
2188-3 the fund until the twenty-five thousand dollars ($25,000)
2189-4 minimum has been reached.
2190-5 "(2) It shall at all times after May 1, 2002, comply
2191-6 with the minimum requirements for payments to the trustee for
2192-7 endowment care.
2193-8 "(d) Any cemetery authority organizing a cemetery
2194-9 after May 1, 2002, whether it be by incorporation,
2195-10 association, individually, or by any other means, or having
2196-11 its first burial after May 1, 2002, before disposing of any
2197-12 burial lot or right or making any sale thereof or making its
2198-13 first burial, or both, shall cause to be deposited with a
2199-14 qualified trustee, in cash, the sum of twenty-five thousand
2200-15 dollars ($25,000) in the endowment care fund.
2201-16 "(e) When a cemetery authority has placed with a
2202-17 trustee, pursuant to this article chapter, a sum of money in
2203-18 excess of the aggregate which would be required only under
2204-19 subsection (a), the cemetery authority shall not be required
2205-20 under this article chapter to make further payments to the
2206-21 trustee until such time thereafter as, taking into account all
2207-22 sales of plots, crypts, and niches in the cemetery property
2208-23 since the first of the sales, the aggregate of payments to the
2209-24 trustee if made in accordance with subsection (a) would equal
2210-25 the applicable minimum amount paid to the trustee under
2211-26 subdivision (1) of subsection (c), or subsection (d) of this
2212-27 section.
2213-Page 83 1 "(f) Any deposit previously made, or represented to
2214-2 be made to an existing endowment care fund which exceeds 10
2215-3 percent of the gross selling price of all plots, crypts, and
2216-4 niches sold since representation of endowment care shall be
2217-5 made a permanent part of the endowment care fund and
2218-6 transferred to the qualified trustee under this article
2219-7 chapter.
2220-8 "§27-17A-50. §34-13-270.
2221-9 "(a) No cemetery authority may directly or
2222-10 indirectly require or direct the investment, reinvestment, or
2223-11 retention by a qualified trustee of any part of an endowment
2224-12 care trust in any asset or business in which the cemetery
2225-13 authority or any officer, director, owner, partner, or
2226-14 employee of the cemetery authority has a financial interest.
2227-15 Nothing contained in this subsection shall prevent the
2228-16 trustee, subject to the provisions regarding investment and
2229-17 reinvestment of the trust estate as are contained in the
2230-18 governing instrument creating the trust, from investing,
2231-19 reinvesting, or retaining any asset or business in which the
2232-20 cemetery authority or any officer, director, owner, partner,
2233-21 or employee of the cemetery authority has an insubstantial or
2234-22 nonmaterial financial interest, provided that the trustee, in
2235-23 the exercise of the trustee's discretion, deems the
2236-24 investment, reinvestment, or retention to be for the best
2237-25 interest of the trust estate.
2238-26 "(b) The net income from the endowment care fund, to
2239-27 the extent that the same is distributed from the fund, shall
2240-Page 84 1 be used exclusively for covering the costs of endowment care
2241-2 of the cemetery.
2242-3 "(c) For the purposes of this section, net income
2243-4 does not include realized or unrealized capital gains or
2244-5 losses. All realized capital gains and losses shall be
2245-6 recorded to corpus, which is the sum of deposits made by a
2246-7 cemetery authority into an endowment care fund, pursuant to
2247-8 Section 27-17A-49 34-13-269, and all realized capital gains or
2248-9 losses. Capital gains taxes, if any, may be paid from the
2249-10 corpus. Unrealized capital gains and losses, if any, shall be
2250-11 recorded as an adjustment to the fair market value of the
2251-12 endowment care fund.
2252-13 "§27-17A-51. §34-13-271.
2253-14 "The trustee shall not be required to inquire into
2254-15 the propriety of the expenditures made by the cemetery
2255-16 authority in connection with endowment care of the cemetery,
2256-17 and it shall not be held responsible in any manner whatsoever
2257-18 for and on account of payments of the income from the
2258-19 endowment care fund made to the cemetery authority.
2259-20 "§27-17A-52. §34-13-272.
2260-21 "The trustee shall, not less than annually, shall
2261-22 file with the cemetery authority an account which shall
2262-23 include a complete disclosure of all activity since the
2263-24 previous account and a statement detailing fund investments.
2264-25 "§27-17A-53. §34-13-273.
2265-26 "To the extent that any endowment care trust
2266-27 existing on May 1, 2002, includes investments or assets, the
2267-Page 85 1 retention of which the trustee in the free exercise of its
2268-2 discretion deems not in the best interest of the trust estate,
2269-3 the trustee shall dispose of the investments or assets as soon
2270-4 as practicable without undue sacrifice to the trust estate,
2271-5 and in any event within two years after May 1, 2002.
2272-6 "§27-17A-54. §34-13-274.
2273-7 "An annual report of the endowment care fund shall
2274-8 be made to the commissioner board by each cemetery authority
2275-9 within 90 days of the close of each calendar year. This report
2276-10 shall include the qualified trustee's name or names, the bond
2277-11 numbers if individual trustees or the name and address of the
2278-12 financial institution in which the fund is maintained, and the
2279-13 affidavit of the cemetery authority affirming compliance with
2280-14 this article chapter. Prior to the sale or transfer of a
2281-15 cemetery, the cemetery authority shall report and document to
2282-16 the commissioner board that the endowment care fund is
2283-17 currently funded in accordance with this article chapter.
2284-18 "§27-17A-55. §34-13-275.
2285-19 "A cemetery authority shall start construction of
2286-20 that section of a mausoleum or bank of below-ground crypts in
2287-21 which sales, contracts for sale, reservations for sale, or
2288-22 agreements for sale are being made, within five years after
2289-23 the date of the first sale or when 75 percent of the mausoleum
2290-24 or below-ground crypts have been sold and the purchase price
2291-25 has been received, whichever occurs first. The construction
2292-26 shall be completed within six years after the date of the
2293-27 first sale made. Extensions for completion, not to exceed one
2294-Page 86 1 year, may be granted by the commissioner board for good cause
2295-2 shown. If the units have not been completely constructed at
2296-3 the time of need or the time specified herein, unless
2297-4 otherwise specified in the preneed contract, all monies paid
2298-5 shall be refunded upon request, plus interest earned thereon
2299-6 if deposited by the cemetery authority in an escrow or trust
2300-7 fund, and if not so deposited in an escrow or trust fund
2301-8 earning interest, then plus interest in an amount equal to the
2302-9 interest or discount which would have been earned thereon had
2303-10 the funds been invested in United States Treasury Bills having
2304-11 a 90-day maturity.
2305-12 "§27-17A-56. §34-13-276.
2306-13 "(a) Each cemetery authority shall adopt rules.
2307-14 Cemetery rules and regulations are adopted for the mutual
2308-15 protection of the cemetery owners and the owners of interment
2309-16 rights in the cemetery. All owners of interment rights and
2310-17 other persons within the cemetery shall be subject to these
2311-18 rules and regulations as they now exist and as they may be
2312-19 amended or altered by the cemetery. The cemetery authority has
2313-20 the right to may enforce these rules and regulations. The
2314-21 cemetery authority expressly reserves the right and, at any
2315-22 time and without prior notice to any owners, to may adopt new
2316-23 rules and regulations or to amend, modify, or repeal any
2317-24 section, paragraph, or sentence of these rules and
2318-25 regulations.
2319-26 "(b) This section shall not apply to the officers,
2320-27 directors, shareholders, partners, employees, agents, or
2321-Page 87 1 representatives of a cemetery authority who intentionally
2322-2 commit an act of vandalism or other illegal act.
2323-3 "§27-17A-57. §34-13-277.
2324-4 "The commissioner board shall have the same
2325-5 jurisdiction over funeral establishments, funeral directors,
2326-6 cemetery authorities, or third party sellers who sell preneed
2327-7 contracts without a preneed certificate of authority as he or
2328-8 she the board has over those preneed sellers who possess a
2329-9 preneed certificate of authority."
2330-10 Section 6. Beginning with the 2022 fiscal year, the
2331-11 Department of Insurance may transfer to the Alabama Board of
2332-12 Funeral Service quarterly, for deposit by the board into the
2333-13 Alabama State Funeral Service Fund, the total amount of three
2334-14 hundred thousand dollars ($300,000) per fiscal year, to defray
2335-15 costs associated with the administration and operation of the
2336-16 Alabama Preneed Funeral and Cemetery Act of 2022 by the board.
2337-17 Unless extended by an act of the Legislature, this section
2338-18 shall be repealed at the end of the 2025 fiscal year.
2339-19 Section 7. All laws or parts of laws which conflict
2340-20 with this act are repealed, and specifically, Section
2341-21 27-17A-2, Code of Alabama 1975, relating to definitions as now
2342-22 appearing in Section 34-13-1, Code of Alabama 1975, is
2343-23 repealed.
2344-24 Section 8. Although this bill would have as its
2345-25 purpose or effect the requirement of a new or increased
2346-26 expenditure of local funds, the bill is excluded from further
2347-27 requirements and application under Amendment 621, as amended
2348-Page 88 1 by Amendment 890, now appearing as Section 111.05 of the
2349-2 Official Recompilation of the Constitution of Alabama of 1901,
2350-3 as amended, because the bill defines a new crime or amends the
2351-4 definition of an existing crime.
2352-5 Section 9. This act shall become effective on the
2353-6 first day of the first month following its passage and
2354-7 approval by the Governor, or its otherwise becoming law.
2355-Page 89 1
2356-2
2357-House of Representatives3
2358-Read for the first time and re-4
2359-5 ferred to the House of Representa-
2360-6 tives committee on Boards, Agencies
2361-and Commissions....................7 .......11-JAN-22
2362- 8
2363-Read for the second time and placed9
2364-on the calendar 2 amendments .....10 .......16-FEB-22
2365- 11
2366-Read for the third time and passed12
2367-as amended.........................13 .......17-MAR-22
2368-Yeas 89, Nays 5, Abstains 414
2369- 15
2370-16 Jeff Woodard
2371-17 Clerk
2372-18
2373-Page 90
2070+8 "(c) The trustee of the Cemetery Merchandise and
2071+9 Services Trust Fund shall be qualified as such within the
2072+10 definition of the trustee.
2073+11 "(d) The trustee shall take title to the property
2074+12 conveyed to the Cemetery Merchandise and Services Trust Fund
2075+13 subject to this section.
2076+14 "(e) The contract purchaser shall have no interest
2077+15 whatsoever in, or power whatsoever over, the funds deposited
2078+16 in the Cemetery Merchandise and Services Trust Fund.
2079+17 "(f) The party contracting to deliver the cemetery
2080+18 merchandise or cemetery services or cash advances, whether or
2081+19 not a preneed provider, shall be referred to in this section
2082+20 as the "seller."
2083+21 "(g) The seller shall be the beneficiary of the
2084+22 Cemetery Merchandise and Services Trust Fund.
2085+23 "§27-17A-42.§34-13-262.
2086+24 "(a) The obligation of the seller under a preneed
2087+25 contract shall be to make contributions into the Cemetery
2088+26 Merchandise and Services Trust Fund in accordance with the
2089+27 following formulae:
2090+Page 78 1 "(1) With respect to all cemetery merchandise, 110
2091+2 percent of wholesale cost.
2092+3 "(2) With respect to outer burial containers, 60
2093+4 percent of the purchase price specified in the preneed
2094+5 contract.
2095+6 "(3) With respect to cemetery services, 60 percent
2096+7 of the purchase price specified in the preneed contract.
2097+8 "(4) With respect to all cash advance items sold,
2098+9 100 percent of the purchase price specified for the same in
2099+10 the preneed contract.
2100+11 "(5) With respect to caskets, 75 percent of the
2101+12 purchase price.
2102+13 "(b) All contributions shall be made within 30 days
2103+14 after the end of the calendar month in which the preneed
2104+15 contract is paid in full, unless, prior to that time, all
2105+16 liabilities of the seller under the preneed contract to
2106+17 deliver the specific cemetery merchandise or cemetery
2107+18 services, or both, or the specific cash advances, identified
2108+19 by the preneed provider as properly allocated to the payment,
2109+20 have been satisfied, or the preneed contract is validly
2110+21 cancelled.
2111+22 "(c) For all preneed contracts entered into on or
2112+23 after January 1, 2015, all contributions shall be made not
2113+24 later than 30 days after the end of the calendar month in
2114+25 which the sum of the monies collected on the preneed contract
2115+26 exceeds the amount that is not required to be contributed as
2116+27 determined under subsection (a), unless, prior to that time,
2117+Page 79 1 all liabilities of the seller under the preneed contract have
2118+2 been satisfied, or the preneed contract is validly cancelled.
2119+3 Further required trust contributions on the contract shall
2120+4 thereafter be made not later than 30 days after the end of the
2121+5 calendar month in which each contract payment is collected by
2122+6 the seller.
2123+7 "(d) The trustee shall invest and reinvest the
2124+8 Cemetery Merchandise and Services Trust Fund.
2125+9 "(e) The trustee shall make regular evaluations of
2126+10 the fair market value of assets held in and liabilities, if
2127+11 any, of the Cemetery Merchandise and Services Trust Fund and
2128+12 provide a report of the evaluations to the seller at least
2129+13 quarterly. Upon receipt of each quarterly report, the seller
2130+14 may submit to the trustee a written and detailed analysis
2131+15 concerning the balance of funds in the Cemetery Merchandise
2132+16 and Services Trust Fund, certified under oath as being true
2133+17 and correct upon information and belief by a responsible
2134+18 officer of the seller.
2135+19 "(f) While the obligation of the seller to make
2136+20 contributions to the Cemetery Merchandise and Services Trust
2137+21 Fund is set forth in this section, the obligation of the
2138+22 seller at the time of making certain withdrawals from the
2139+23 Cemetery Merchandise and Services Trust Fund as herein
2140+24 provided for shall be calculated with respect to the current
2141+25 wholesale cost of cemetery merchandise and current retail
2142+26 price of cemetery services and cash advances at the time of
2143+27 withdrawal. If the fair market value as reported by the
2144+Page 80 1 trustee exceeds 110 percent of the total of the following, the
2145+2 seller shall be entitled to withdraw and retain from the
2146+3 merchandise trust fund, the excess funds therein: 110 percent
2147+4 of the current wholesale cost of the liability to deliver all
2148+5 cemetery merchandise, 60 percent of the current retail price
2149+6 for all cemetery services, 60 percent of the current retail
2150+7 price of outer burial containers, 75 percent of the current
2151+8 retail price of caskets, and 100 percent of the current retail
2152+9 price of all cash advances, for the total of all preneed
2153+10 contracts for which the purchasers have paid in full, all
2154+11 calculated as of the time of withdrawal; and concerning the
2155+12 total of all preneed contracts for which the purchasers have
2156+13 not paid in full, 25 percent of the total of the following:
2157+14 110 percent of the current wholesale cost of the liability to
2158+15 deliver all cemetery merchandise, 60 percent of the current
2159+16 retail price for all cemetery services, and 100 percent of the
2160+17 current retail price of all cash advances, all calculated as
2161+18 of the time of withdrawal.
2162+19 "(g) At least annually the seller shall make the
2163+20 aforesaid analysis and certification and provide the same to
2164+21 the trustee. If the certification discloses that the fair
2165+22 market value of the Cemetery Merchandise and Services Trust
2166+23 Fund is less than 100 percent of the aggregate calculated
2167+24 amount the seller shall from its own funds contribute to the
2168+25 Cemetery Merchandise and Services Trust Fund within the 12
2169+26 months succeeding the annual computation the amount necessary
2170+Page 81 1 to restore the trust fund to an amount equal to not less than
2171+2 100 percent of the aggregate amount so calculated.
2172+3 "§27-17A-43.§34-13-263.
2173+4 "(a) Upon cancellation of a preneed contract by
2174+5 mutual agreement between the seller and purchaser, or upon
2175+6 unilateral cancellation of a preneed contract by the seller by
2176+7 reason of default on the part of the purchaser, or other valid
2177+8 cancellation by reason of transfers to another seller or
2178+9 otherwise, the seller may, upon submission of a certification
2179+10 under oath by a responsible officer of the seller to the
2180+11 trustee, may withdraw from the Cemetery Merchandise and
2181+12 Services Trust Fund and retain an amount equal to the amount
2182+13 of all funds contributed to the trust fund with respect to the
2183+14 preneed contract. Any trustee accepting preneed contract
2184+15 proceeds under this article chapter may rely on the seller's
2185+16 certification under oath as required herein to be made, and
2186+17 shall not be liable to anyone for such reliance.
2187+18 "(b) At such time as the seller undertakes to
2188+19 perform its obligations under a preneed contract by delivery
2189+20 or installation, or both, of cemetery merchandise and the
2190+21 provision of cemetery services and disbursement on account of
2191+22 cash advances, or otherwise, upon certification to the trustee
2192+23 under oath by a responsible officer of the seller that the
2193+24 obligations of the seller under the contract have been
2194+25 completely fulfilled, the seller may withdraw from the
2195+26 Cemetery Merchandise and Services Trust Fund and retain an
2196+Page 82 1 amount equal to the current wholesale cost to the fund with
2197+2 respect to the preneed contract.
2198+3 "(c) At such time as the seller has fulfilled all of
2199+4 its obligations under all preneed contracts with respect to
2200+5 which funds have been contributed to the trust fund, and
2201+6 certification under oath to the trustee by a responsible
2202+7 officer of the seller of those facts, the seller may withdraw
2203+8 from the trust fund and retain all of the remaining assets
2204+9 thereof.
2205+10 "§27-17A-44.§34-13-264.
2206+11 "If the amounts paid by the purchaser under a
2207+12 preneed contract for cemetery merchandise have previously been
2208+13 deposited in trust, the seller may withdraw the principal
2209+14 amount there, at such time as the cemetery merchandise is
2210+15 delivered or installed or, if comprised of materials designed
2211+16 to withstand prolonged, protected storage without
2212+17 deterioration, the merchandise is placed in storage with a
2213+18 responsible third party bonded and insured for the wholesale
2214+19 value thereof and evidenced by a receipt specifically
2215+20 identifying the item, the specific preneed contract, the
2216+21 location of the item, and the identity and address of the
2217+22 bonding and insuring parties. For purposes of this section
2218+23 only, caskets and alternative containers may not be held in
2219+24 storage by the seller or a third party storage facility prior
2220+25 to the death of the funeral beneficiary.
2221+26 "§27-17A-45.§34-13-265.
2222+Page 83 1 "An endowment care fund and all payments or
2223+2 contributions to it are expressly permitted as and for
2224+3 charitable and eleemosynary purposes. No payment, gift, grant,
2225+4 bequest, or other contribution for endowment care is invalid
2226+5 by reason of any indefiniteness or uncertainty of the persons
2227+6 designated as beneficiaries in the instruments creating the
2228+7 fund, nor is the fund or any contributions to it invalid as
2229+8 violating any law against perpetuities, or the suspension of
2230+9 the power of alienation of title to property.
2231+10 "§27-17A-46§34-13-266.
2232+11 "(a) Any cemetery now existing or hereafter
2233+12 established, excluding those operated by governmental agencies
2234+13 or religious institutions, shall be may be qualified as an
2235+14 endowment care cemetery, except those cemeteries which do not
2236+15 charge fees or sell plots, interment rights, or any related
2237+16 cemetery merchandise.
2238+17 "(b) If the history of operations and current and
2239+18 past business practices of a cemetery are not clearly defined
2240+19 so as to qualify the cemetery for an exemption from this
2241+20 chapter, the board may determine whether the cemetery
2242+21 authority in question qualifies for the exemption.
2243+22 "§27-17A-47§34-13-267.
2244+23 "(a) Every cemetery authority operating an endowment
2245+24 care cemetery shall establish an endowment care fund which
2246+25 shall be placed with and held by a bank, trust company,
2247+26 savings and loan association, or other financial institution
2248+27 authorized to provide trust services under Title 5, as
2249+Page 84 1 amended, or under the applicable laws of the United States or
2250+2 any other state, or a board of trustees, consisting of at
2251+3 least three members, who shall reside in the State of Alabama,
2252+4 one of whom is engaged in outside cemetery management, and
2253+5 each of whom shall be bonded to honestly perform the duties of
2254+6 trustee under a formal trust agreement.
2255+7 "(b) An endowment care fund and all payments or
2256+8 contributions to it are expressly permitted as and for
2257+9 charitable and eleemosynary purposes. No payment, gift, grant,
2258+10 bequest, or other contribution for endowment care is invalid
2259+11 by reason of any indefiniteness or uncertainty of the persons
2260+12 designated as beneficiaries in the instruments creating the
2261+13 fund, nor is the fund or any contributions to it invalid as
2262+14 violating any law against perpetuities, or the suspension of
2263+15 the power of alienation of title to property.
2264+16 "(b)(c) Except as specifically provided in this
2265+17 subsection, commencing on July 1, 2014, a person serving on a
2266+18 board of trustees or cemetery authority may not also serve as
2267+19 a trustee of an endowment care fund for the cemetery
2268+20 authority. A board of trustees in existence on July 1, 2014,
2269+21 may continue to serve as the trustee of an endowment care fund
2270+22 if the board of trustees otherwise complies with this
2271+23 subsection. Unless exempted by the commissioner board pursuant
2272+24 to this subsection, on or before January 1, 2015, each member
2273+25 of a board of trustees in existence on July 1, 2014, shall
2274+26 furnish the bond required by subsection (a) in the greater of
2275+27 one hundred thousand dollars ($100,000) or the amount in each
2276+Page 85 1 endowment care fund for which the board of trustees acts as
2277+2 trustee as of December 31, 2014. Thereafter, the amount of the
2278+3 bonds shall be increased on January 1 of each succeeding year
2279+4 to equal the amount in each endowment care fund as of the
2280+5 immediately preceding December 31. The commissioner board
2281+6 shall exempt a board of trustees from the bond requirement if
2282+7 the board of trustees provides to the commissioner board an
2283+8 annual audit report that satisfies all of the following
2284+9 criteria:
2285+10 "(1) The report is prepared by a certified public
2286+11 accountant authorized to practice in Alabama.
2287+12 "(2) The report evidences that the review made the
2288+13 subject of the report by the accountant encompasses each
2289+14 endowment care fund for which the board of trustees acts as
2290+15 trustee.
2291+16 "(3) The report notes relating to the endowment care
2292+17 fund or funds are in a form that is reasonably acceptable to
2293+18 the commissioner board.
2294+19 "(4) The report does not evidence any material
2295+20 violation of or noncompliance with this chapter relating to an
2296+21 endowment care fund.
2297+22 "(c)(d) The corporate trustee or board of trustees
2298+23 shall be referred to as a qualified trustee. Unless otherwise
2299+24 specified in this article chapter or in the terms of the trust
2300+25 instrument, the trustee of any trust established under or
2301+26 pursuant to this article chapter shall have all powers granted
2302+27 to trustees under Article 14 of Chapter 3 of Title 19. The
2303+Page 86 1 incorporation herein of such powers shall not be deemed to
2304+2 imply any duties of trustees of trusts established under or
2305+3 pursuant to this article chapter not expressly delineated in
2306+4 this article chapter.
2307+5 "(d)(e) The cemetery authority may employ a person
2308+6 to advise the trustee in the management of the fund.
2309+7 "(e)(f) The cemetery authority may enter into a
2310+8 contract with the qualified trustee for the management and
2311+9 investment of the endowment care fund, which contract may
2312+10 provide for the payment of income from the fund of reasonable
2313+11 fees or commissions to the trustee, and its reasonable
2314+12 expenses for administering the trust.
2315+13 "(f)(g) As often as he or she may deem necessary,
2316+14 the commissioner board may examine audit the records or
2317+15 facilities, or both, of any cemetery authority operating an
2318+16 endowment care cemetery.
2319+17 "§27-17A-48.§34-13-268.
2320+18 "(a) Each In addition to Section 8-30-2, each
2321+19 cemetery authority shall comply with this chapter and maintain
2322+20 at each place of business a list of the names and addresses of
2323+21 its owners and directors, which shall be available to the
2324+22 public.
2325+23 "(b) Each cemetery authority shall maintain a record
2326+24 of all property interment space owners by name and last known
2327+25 address with a description of merchandise and location of
2328+26 burial lots, crypts, or niches and the records shall be on a
2329+27 form or in a format prescribed by the board and shall detail
2330+Page 87 1 all information required by the board. A plat map shall be
2331+2 maintained for each cemetery location at the cemetery business
2332+3 office. A book or file shall be kept as to the date, location
2333+4 by lot, and space number of each person interred or entombed
2334+5 in the cemetery. A written copy of the cemetery rules and
2335+6 regulations and a schedule of charges shall be maintained at
2336+7 each location and made available to the public upon request.
2337+8 "§27-17A-49§34-13-269.
2338+9 "(a) From the sale price of each plot, crypt, or
2339+10 niche sold by the cemetery authority, of an endowment care
2340+11 cemetery, it shall pay an amount, not less than as determined
2341+12 in accordance with the following schedule, to the trustee of
2342+13 the endowment care fund, which payment shall be paid over to
2343+14 the trustee not more than four months after the close of the
2344+15 month in which the total or final payment on the sale has been
2345+16 received:
2346+17 "(1) Fifteen percent of the sale price of each grave
2347+18 or lawn crypt space as specified in the cemetery's schedule of
2348+19 charges.
2349+20 "(2) Five percent of the sale price of each
2350+21 mausoleum crypt or niche as specified in the cemetery's
2351+22 schedule of charges.
2352+23 "(3) The amount received for special care funds,
2353+24 gifts, grants, contribution devises, or bequests made with
2354+25 respect to the separate or special care of a particular lot,
2355+26 grave, crypt, niche, mausoleum, monument, or marker or that of
2356+Page 88 1 a particular family, as distinguished from the general endowed
2357+2 care of a cemetery or of a garden.
2358+3 "(b) In addition to subsection (a), a cemetery
2359+4 authority may receive, and transfer to the trustee, as a part
2360+5 of or incident to the endowment care fund, any property, real,
2361+6 personal, or mixed, bequeathed, devised, given, or otherwise
2362+7 contributed to it for endowment care purposes. Any contractual
2363+8 endowment care deposits shall fall under this article chapter.
2364+9 "(c) Any cemetery authority which is organized and
2365+10 engaged in business prior to May 1, 2002, shall qualify as an
2366+11 endowment care cemetery if the following occur:
2367+12 "(1) Not already placed, it shall within 90 days of
2368+13 May 1, 2002, have placed the entire principal of any endowment
2369+14 care fund in its possession, custody, or control, into the
2370+15 hands of a qualified trustee designated by it, to be
2371+16 administered as set forth in this article chapter; and
2372+17 principal of its endowment care fund, or the aggregate
2373+18 principal of its endowment care funds, if more than one, shall
2374+19 have a fair market value on either May 1, 2002, or on the date
2375+20 of transfer to the trustee of not less than twenty-five
2376+21 thousand dollars ($25,000); or it shall substitute 25 percent
2377+22 for each percentage of each sale for the next five years or
2378+23 five thousand dollars ($5,000) per year, whichever is greater,
2379+24 until the balance of twenty-five thousand dollars ($25,000) is
2380+25 reached. In such case, the entire amount of twenty-five
2381+26 thousand dollars ($25,000) shall be paid into the fund before
2382+27 the end of the fifth year, and no interest may be removed from
2383+Page 89 1 the fund until the twenty-five thousand dollars ($25,000)
2384+2 minimum has been reached.
2385+3 "(2) It shall at all times after May 1, 2002, comply
2386+4 with the minimum requirements for payments to the trustee for
2387+5 endowment care.
2388+6 "(d) Any cemetery authority organizing a cemetery
2389+7 after May 1, 2002, whether it be by incorporation,
2390+8 association, individually, or by any other means, or having
2391+9 its first burial after May 1, 2002, before disposing of any
2392+10 burial lot or right or making any sale thereof or making its
2393+11 first burial, or both, shall cause to be deposited with a
2394+12 qualified trustee, in cash, the sum of twenty-five thousand
2395+13 dollars ($25,000) in the endowment care fund.
2396+14 "(e) When a cemetery authority has placed with a
2397+15 trustee, pursuant to this article chapter, a sum of money in
2398+16 excess of the aggregate which would be required only under
2399+17 subsection (a), the cemetery authority shall not be required
2400+18 under this article chapter to make further payments to the
2401+19 trustee until such time thereafter as, taking into account all
2402+20 sales of plots, crypts, and niches in the cemetery property
2403+21 since the first of the sales, the aggregate of payments to the
2404+22 trustee if made in accordance with subsection (a) would equal
2405+23 the applicable minimum amount paid to the trustee under
2406+24 subdivision (1) of subsection (c), or subsection (d) of this
2407+25 section.
2408+26 "(f) Any deposit previously made, or represented to
2409+27 be made to an existing endowment care fund which exceeds 10
2410+Page 90 1 percent of the gross selling price of all plots, crypts, and
2411+2 niches sold since representation of endowment care shall be
2412+3 made a permanent part of the endowment care fund and
2413+4 transferred to the qualified trustee under this article
2414+5 chapter.
2415+6 "§27-17A-50§34-13-270.
2416+7 "(a) No cemetery authority may directly or
2417+8 indirectly require or direct the investment, reinvestment, or
2418+9 retention by a qualified trustee of any part of an endowment
2419+10 care trust in any asset or business in which the cemetery
2420+11 authority or any officer, director, owner, partner, or
2421+12 employee of the cemetery authority has a financial interest.
2422+13 Nothing contained in this subsection shall prevent the
2423+14 trustee, subject to the provisions regarding investment and
2424+15 reinvestment of the trust estate as are contained in the
2425+16 governing instrument creating the trust, from investing,
2426+17 reinvesting, or retaining any asset or business in which the
2427+18 cemetery authority or any officer, director, owner, partner,
2428+19 or employee of the cemetery authority has an insubstantial or
2429+20 nonmaterial financial interest, provided that the trustee, in
2430+21 the exercise of the trustee's discretion, deems the
2431+22 investment, reinvestment, or retention to be for the best
2432+23 interest of the trust estate.
2433+24 "(b) The net income from the endowment care fund, to
2434+25 the extent that the same is distributed from the fund, shall
2435+26 be used exclusively for covering the costs of endowment care
2436+27 of the cemetery.
2437+Page 91 1 "(c) For the purposes of this section, net income
2438+2 does not include realized or unrealized capital gains or
2439+3 losses. All realized capital gains and losses shall be
2440+4 recorded to corpus, which is the sum of deposits made by a
2441+5 cemetery authority into an endowment care fund, pursuant to
2442+6 Section 27-17A-49 34-13-269, and all realized capital gains or
2443+7 losses. Capital gains taxes, if any, may be paid from the
2444+8 corpus. Unrealized capital gains and losses, if any, shall be
2445+9 recorded as an adjustment to the fair market value of the
2446+10 endowment care fund.
2447+11 "§27-17A-51§34-13-271.
2448+12 "The trustee shall not be required to inquire into
2449+13 the propriety of the expenditures made by the cemetery
2450+14 authority in connection with endowment care of the cemetery,
2451+15 and it shall not be held responsible in any manner whatsoever
2452+16 for and on account of payments of the income from the
2453+17 endowment care fund made to the cemetery authority.
2454+18 "§27-17A-52§34-13-272.
2455+19 "The trustee shall, not less than annually, shall
2456+20 file with the cemetery authority an account which shall
2457+21 include a complete disclosure of all activity since the
2458+22 previous account and a statement detailing fund investments.
2459+23 "§27-17A-53§34-13-273.
2460+24 "To the extent that any endowment care trust
2461+25 existing on May 1, 2002, includes investments or assets, the
2462+26 retention of which the trustee in the free exercise of its
2463+27 discretion deems not in the best interest of the trust estate,
2464+Page 92 1 the trustee shall dispose of the investments or assets as soon
2465+2 as practicable without undue sacrifice to the trust estate,
2466+3 and in any event within two years after May 1, 2002.
2467+4 "§27-17A-54§34-13-274.
2468+5 "An annual report of the endowment care fund shall
2469+6 be made to the commissioner board by each cemetery authority
2470+7 within 90 days of the close of each calendar year. This report
2471+8 shall include the qualified trustee's name or names, the bond
2472+9 numbers if individual trustees or the name and address of the
2473+10 financial institution in which the fund is maintained, and the
2474+11 affidavit of the cemetery authority affirming compliance with
2475+12 this article chapter. Prior to the sale or transfer of a
2476+13 cemetery, the cemetery authority shall report and document to
2477+14 the commissioner board that the endowment care fund is
2478+15 currently funded in accordance with this article chapter.
2479+16 "§27-17A-55.§34-13-275.
2480+17 "A cemetery authority shall start construction of
2481+18 that section of a mausoleum or bank of below-ground crypts in
2482+19 which sales, contracts for sale, reservations for sale, or
2483+20 agreements for sale are being made, within five years after
2484+21 the date of the first sale or when 75 percent of the mausoleum
2485+22 or below-ground crypts have been sold and the purchase price
2486+23 has been received, whichever occurs first. The construction
2487+24 shall be completed within six years after the date of the
2488+25 first sale made. Extensions for completion, not to exceed one
2489+26 year, may be granted by the commissioner board for good cause
2490+27 shown. If the units have not been completely constructed at
2491+Page 93 1 the time of need or the time specified herein, unless
2492+2 otherwise specified in the preneed contract, all monies paid
2493+3 shall be refunded upon request, plus interest earned thereon
2494+4 if deposited by the cemetery authority in an escrow or trust
2495+5 fund, and if not so deposited in an escrow or trust fund
2496+6 earning interest, then plus interest in an amount equal to the
2497+7 interest or discount which would have been earned thereon had
2498+8 the funds been invested in United States Treasury Bills having
2499+9 a 90-day maturity.
2500+10 "§27-17A-56.§34-13-276.
2501+11 "(a) Each cemetery authority shall adopt rules.
2502+12 Cemetery rules and regulations are adopted for the mutual
2503+13 protection of the cemetery owners and the owners of interment
2504+14 rights in the cemetery. All owners of interment rights and
2505+15 other persons within the cemetery shall be subject to these
2506+16 rules and regulations as they now exist and as they may be
2507+17 amended or altered by the cemetery. The cemetery authority has
2508+18 the right to may enforce these rules and regulations. The
2509+19 cemetery authority expressly reserves the right and, at any
2510+20 time and without prior notice to any owners, to may adopt new
2511+21 rules and regulations or to amend, modify, or repeal any
2512+22 section, paragraph, or sentence of these rules and
2513+23 regulations.
2514+24 "(b) This section shall not apply to the officers,
2515+25 directors, shareholders, partners, employees, agents, or
2516+26 representatives of a cemetery authority who intentionally
2517+27 commit an act of vandalism or other illegal act.
2518+Page 94 1 "§27-17A-57.§34-13-277.
2519+2 "The commissioner shall have the same jurisdiction
2520+3 over funeral establishments, funeral directors, cemetery
2521+4 authorities, or third party sellers who sell preneed contracts
2522+5 without a preneed certificate of authority as he or she has
2523+6 over those preneed sellers who possess a preneed certificate
2524+7 of authority."
2525+8 Section 6. All laws or parts of laws which conflict
2526+9 with this act are repealed, and specifically, Section
2527+10 27-17A-2, Code of Alabama 1975, relating to definitions as now
2528+11 appearing in Section 34-13-1, Code of Alabama 1975, is
2529+12 repealed.
2530+13 Section 7. Although this bill would have as its
2531+14 purpose or effect the requirement of a new or increased
2532+15 expenditure of local funds, the bill is excluded from further
2533+16 requirements and application under Amendment 621, now
2534+17 appearing as Section 111.05 of the Official Recompilation of
2535+18 the Constitution of Alabama of 1901, as amended, because the
2536+19 bill defines a new crime or amends the definition of an
2537+20 existing crime.
2538+21 Section 8. This act shall become effective on the
2539+22 first day of the first month following its passage and
2540+23 approval by the Governor, or its otherwise becoming law.
2541+Page 95